Refer to the information provided in Figure 8.4 below to answer the questions that follow. C3 C2 C1 45° Y2 Y1 Aggregate income Figure 8.4 Refer to Figure 8.4. If income is Y 1, aggregate consumption is the smallest when the aggregate consumption function is Select one: а. С 2. b. С 3- C. cannot be determined from the figure d. C 1. Aggregate saving

Refer to the information provided in Figure 8.4 below to answer the questions that follow. C3 C2 C1 45° Y2 Y1 Aggregate income Figure 8.4 Refer to Figure 8.4. If income is Y 1, aggregate consumption is the smallest when the aggregate consumption function is Select one: а. С 2. b. С 3- C. cannot be determined from the figure d. C 1. Aggregate saving

Economics (MindTap Course List)

13th Edition

ISBN:9781337617383

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter10: Keynesian Macroeconomics And Economic Instability: A Critique Of The Self Regulating Economy

Section: Chapter Questions

Problem 2WNG

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Suppose that for a particular economy, for some time period, consumption was given by theconsumption function C = 300 + 0.9YD, investment was equal to 200, government expenditure wasequal to 100, net taxes were fixed at 100, exports were equal to 200, and imports were given by theimports function Z = 10 + 0.1YD. Note that YD represents disposable income. a.Suppose households earn $150 more in their disposable income. How much more would theyconsume in total? How much go to domestic goods and how much go to imported goods? Howmuch would they end up saving? b.What is the level of equilibrium income? What about the level of consumption and import? c.What are the values of the government spending multiplier, tax multiplier and balanced-budgetmultiplier? d.Suppose the investment level suddenly declined by 20. How should the government stabilize theeconomy? Please provide all options in detail
Assume the following IS-LM model:Expenditure sector: Money sector:C = 100 + (4/5)YD I = 300 - 20i M = 700G = 120 TA = (1/4)Y P = 2 YD = Y - TA NX = -20 Md = (1/3)Y + 200 - 10i a) Derive the IS and LM equations for the above model.b) Draw the IS and LM curves. What are the equilibrium values of output (Y) and interest rate(i)? Show these values on the graph you drew. Derive the equilibrium values of consumption (C) and money demand (Md).c) How much investment (I) will be crowded out if the government increases its purchases by ΔG = 160 and nominal money supply (M) remains unchanged? Show how this increase in government purchases would affect the graph in part (b) by drawing a new graph.
Consider the following NIPA data for 1Q2021 (First Quarter 20210 $ billlion) Investment: Non Residential $2,948.3 Exports $2,305.3 PCE Goods $5,183.5 Investment: Residential $1,043.7 Government Expendiures Federal $1,557.0 PCE Services $9,857.7 Imports $3,152.3 Governemnt Expenditures : State and local Goernent Expenditures $2,395.9 Change in private inventories -$90.1 2a. Compute the weights of each of PCE, GPDI, NX and GOV) in GDP 2b. Consider the following rates of change (%) for each of the above items. % change PCE 10.70% GPDI -5.00% NX -6.80% GOV 6.30%
tions gwep17t.09.024 O O Which of the following are leakages from the circular flow of income? a. Savings, taxes, and imports b. Investment, government purchases, and exports c. Investment, taxes and bonds d. Imports, wages and taxes Note:- Please avoid using ChatGPT and refrain from providing handwritten solutions; otherwise, I will definitely give a downvote. Also, be mindful of plagiarism.Answer completely and accurate answer.Rest assured, you will receive an upvote if the answer is accurate.
Assumptions for all the questions: Private consumption is a function of disposable income and wealth (unless stated otherwise). Investment depends only on the real interest rate (unless stated otherwise). please present your answer using graphs and short explanations. Assume that the economy is open and that CF= 0. Assume that Y*< Yfull. Analyze the influence of the following events (analyze each event separately unless said otherwise) on the equlibrium outcomes. Use the diagrams and show the changes relative to the initial situation which you described in A. In each section show what will happen to output, real interest rate, net capital flow (CF), import surplus (IM-EX), real exchange rate, private consumption, investment and inflation rate in the short run and in the long run. a) Assume that we are in the initial situation of short-run equilibrium described above. The government decided to decrease taxes and increase bonds in order to increse household consumption. asume…
Consider the following model of an economy operating with fixed wages, prices and interest rates and hasexcess capacity. Adsume all figures are I Zambian kwacha. C=100+0.8yd, T=100+25Y, G=980 and I= 500 Where c is consumption, yd is disposable income, T is taxes net of transformers, G is government spending on goods and services and I is investments. A. Calculate the equilibrium level of national income B. Illustrate your equilibrium in the keyneasian cross diagran C. What is the value of the multiplier D. Is governnent running a surplus or a deficit E. Show the impact of a reduction in government spending by 80 on the equilibrium level of national income F. Illustrate your new equilibrium in the same Keynesian cross diagram as in b.
Please give a detailed solution with an explanation. Please double-check your sources and make sure the answer is 100% correct. Make sure ALL questions are answered too.Blank Answer #1:value of all goods and services produced in the economy in the base yearcost of a given market basket of goods and servicesvalue of all goods and services produced in the economy this yearBlank Answer #2:this year's pricesthe base year's pricesBlank Answer #3:value of all goods and services produced in the economy in the base yearcost of a given market basket of goods and servicesvalue of all goods and services produced in the economy this yearBlank Answer #4:this year's pricesthe base year's pricesBlank Answer #5:produced domesticallybought by consumers
Given: C = 250 + 0.8 Y I = 150 G = 300 TR = 100 NX = 100 t =0.25 i) Find the equilibrium level of income. ii) Suppose, because of current COVID-19 situation C falls to 50, MPS falls to .05, I falls to 10, G falls to 100 and NX falls to 10. How much TR should the government increase to have the same level of equilibrium income as in part i)? iii) In determining the required change in TR in part ii), which multiplier did you use and why? (Hint: keep in mind the consumption tendency households may have under the COVID 19 situation in selecting the multiplier). iv) Draw a graph to show the appropriate changes between part i) and part ii). v) Give an example related to current Bangladeshi situation where the government may follow a 'Transfer Promoting Policy' instead of a 'Growth Promoting Policy' in determining who gets the transfer payment. vi) Instead of paying transfer (TR) if the government were to increase government spending (G), what type of crowding out would you expect? Briefly…
Consider an economy called Xanadu for which desired aggregate consumptiondepends on income, Y. and the real interest rate, r, according toCd =100+0.7Y - 200r.Xanadu's GDP is Y = 1000 and government spending on goods and services is G=180. Xanadu's desired future capital stock is given byK* = 140 - 100ucwhere luCdenotes the user-cost of capital. The price of capital is PK =2, thephysical depreciation rate is d =0.1 and the existing capital stock is K0= 50. Trapital stock between any period t and the following period t+1 evolves accordng toKt+1 = It+(1-d)Kt where It the level of investment. Assume throughout that net factor payments from abroad (NFP) is equal to zero.Suppose instead that Xanadu is a small open economy facing a world interest rate of 1%. It follows that Xanadu's current account position is equal toA) -16B) -51C) -6D) -8
QUESTION TWOConsider a hypothetical economy with the following model.Goods Market Money MarketC = 200 + 0.75(Y − T) (M/P)d = Y − 100rI = 200 − 25? Ms = 1000G = 100 P = 2T = 100A. Derive an expression for the IS curve and an expression for the LM curve. B. On the same set of axes, draw the IS and LM curve. C. Find the level of interest and income that ensures a simultaneous equilibrium in the goods and money market.
3. An economy shows the following featuresConsumption, C = 50 + 0.9YdTax Revenue, T = 100Investment, I = 150 – 5iGovernment Expenditure, G = 100Money demand, L = 0.2Y – 10iMoney Supply, M = 100Exports, X = 20Imports, M = 10 + 0.1YN/BYd is the disposable incomeRequired,(a) Obtain the IS and LM equations of the economy(b) Find the equilibrium income and rate of interest(c) Find the balance of trade
Consumption, ? = 0.8?? + 80,Tax, ? = 0.3? + 10Investment, ? = −30r + 800Money supply, ?s = 8000 andMoney demands: ?1 = 0.2?, ?2 = −20? + 4000i. Determine the values of national income, ?, and interest rate, ?, on the assumption thatboth the commodity and the money markets are in equilibrium.ii. Identify the autonomous components and induced components among the aboveequations. Explain the reasons why the components have been identified as autonomousor induced.