Suppose an economy is represented by the following equations. Consumption function C = 200 + 0.8Yd Planned investment I = 400 Government spending G = 600 Exports EX = 200 Imports IM = 0.1Yd Autonomous Taxes T = 500 Marginal Tax Rate t=0.2 Planned aggregate expenditure AE = C + I + G + (EX - IM) By using the above information calculate the equilibrium level of income for this economy and explain why fiscal policy becomes less effective in an open economy

Consider the following economy:   C = 300 + 0.8 (Y – T) I = $300                                               G = $200 and T = $250   What is the equilibrium level of national income? What is the change in national income, if only government spending increases by $10?  What is the government spending multiplier? What is the change in national income, if only taxes increase by $10? What is the tax       multiplier? Based on (b) and (c), does the balanced budget multiplier theorem hold? What is the change in national income, if both government spending and taxes increase by $10 each?

For the y axis, why is it labeled income and not consumption output

. Suppose an economy is represented by the following equations.Consumption function C = 100 + 0.8YdPlanned investment I = 38Government spending G = 75Exports EX = 25Imports IM = 0.05YdAutonomous Taxes T = 40Planned aggregate expenditure AE = C + I + G + (EX - IM)a. By using the above information calculate the equilibrium level of income for thiseconomy. b. Calculate the value of expenditure multiplier. c. Suppose that government spending is increased by 5, what will happen to theequilibrium income level?

Define the tax multiplier and give the algebraic expression.

President Biden has proposed a $2.2 trillion Infrastructure package to repair roads and bridges. The exact source of the funds is unclear at the time of construction of this exam, but some policy analysts think that at least one part of the funding will be an increase in the federal excise tax on gasoline. Suppose the size of this increase in excise tax is written as t.  Using a graph and equilibrium, analyze and explain the impact of this t dollars per gallon increase in excise tax on gasoline. Which of the curve(s), if any, would shift, and why? Graphically, show the new equilibrium price and quantity (labeling it P1 and Q1). At the new equilibrium, please determine how much of the tax increase was borne by gasoline consumers and how much was absorbed by gasoline sellers? Indicate the incidence of taxation for both consumers and sellers on the graph and explain. What will determine whether consumers or sellers will bear a higher relative burden of taxation? Please explain in detail.

Suppose the economy of Apple Republic is represented by the following equations: Z = C +|+ G C = 500 + .5YD T= 600 |= 300 YD = Y - T G = 2000 (Enter number only into the boxes) a. Given the above variables, calculate the equilibrium level of output (Y) disposable income (Yp) and consumption (C) Hint: First specify (using the above numbers) the demand equation (Z) for this economy. Second, using the equilibrium condition, equate this expression with Y. Once you have done this, solve for the equilibrium level of output (Y). Third, once you get Y, you can T from Y to get Yp. Finally, once you get Yp, you substitute it into the consumption equation to get consumption (C). b. Now, assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output (Y) ? What is the multiplier for this economy c. Now, assume that G is still at 2000, but taxes increase from 600 to 700. What is the new equilibrium level of output (Y) ? What is the multiplier for this…

Question 1 Use the following equations to answer the questions below. The Peruvian economy can be characterized by these equations below. C = 400+ 0.6Yd Taxes = 600 Equilibrium Output = $4,000 a) Graph the consumption function in the income/output and aggregate expenditures space. Label your horizontal axis income/output (Y) and your vertical axis (AE). Label the vertical intercept and at least one other coordinate on the consumption function. What is the sum of investment and government purchases at equilibrium? Show your work. b) c) d) What is the equation for aggregate expenditure? Graph the aggregate expenditure function in the same graph from (a). Label the vertical intercept and equilibrium. At equilibrium, what is the level of saving in Peru? Show your work. On a separate graph, draw the saving function. Label your horizontal axis income/output (Y) and your vertical axis saving (S). Label the vertical intercept and horizontal intercept. e) The President of Peru hires you as an…

You can use the AE model to show that an increase in government purchases can increase output but in many cases it is hard to find useful things for the government to quickly spend money on. Many people in Boston say "the T is so slow, why not spend it on building or replacing the subway lines?" but new subways lines can take years to plan. A fast alternative is to cut net taxes by sending people transfer payments. Consider a standard AE model with this consumption function, C=4+0.5Y-bT and unknown and unimportant values for planned investment and planned government purchases. What is the "T multiplier," which is defined as the change in equilibrium income per $1 increase in taxes? -b -2b +b +2b O O O O

Income Expenditures 0 100 100 150 200 200 300 250 Refer to the table above to answer the following: (a) At an income level of $200, how much is autonomous expenditures and how much is induced? (b) Given the expenditures function AE = $4,000 + 0.6Y and income of $1,000, how much is spent and how much is induced?