Suppose that the economy is characterized by the following behavioral equations: C = 180 + 0.75YD | = 160 G = 160 T= 130 Equilibrium GDP (Y) =- (Round your response to two decimal places.) %3D
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- suppose the economy is characterized by the following behavioral equations: C=160+0.6YD, I=150, G=150, T=100. Solve the following variables: a). Equilibrium GDP (Y) b). Disposable income (YD) c). Consumption spending (C)Assume the following behavioral equations for a macroeconomy:C = 100 + 0.9Yd, I = 50, T = 100 and G = 40. Calculate the equilibrium level of output.The fundamental concept in behavioral economics is that due to psychological phenomena, individuals may behave in ways that were previously believed to be irrational according to classical economic theory. Choose T or F: a. True b. False
- Why do behavioral economists consider it helpful to base a theory of economic behavior on the actual mental processes that people use to make decisions? Why do neoclassical economists not care about whether a theory incorporates those actual mental processes?Explain the difference between the policy preferences function and the indirect utility function.What are the limitations of Samuelson general equilibrium model
- The horizontally oriented definition of DEMAND states that "demand is the quantitites of a good that buyers are willing and able to buy at various prices in a given time interval." Which of the following statements are TRUE? If I really like a good, it does not matter how much I am able to afford to spend on it. The demand for a good is a specific amount. Demand is a behavioral relationship expressing what quantities buyers would want and be able to buy at various prices. If I can't afford to buy a product at today's available prices, I do not have a demand. The demand is all the possible price quantity combinations Demand depends on the availability of supply. Demand is a relationship between price as a variable and quantity demanded as a variable. Demand is a flow and requires a time interval be be fully understood.“According to the Random-Walk Hypothesis of Consumption under Uncertainty, individuals don’t need to optimise their consumption over time since the consumption is totally unpredictable” True or False?Suppose we start with a general equilibrium, and the economy experience an improvement in payment technology. Which of the following statements correctly describes the goods market response in the short term? 1. The IS curve remains unchanged 2. The IS curve shifts to the left 3. The IS curve shifts to the right 4. None of the above
- According to the basic discounting principle, individuals value current consumption (i.e. consumption now) more than future consumption (i.e. consumption tomorrow). A) True B) FalseWhy does the ceteris paribus assumption allow economists to focus on the variable they are interested in? Give an example.Consider the following intertemporal consumption problem with one good and two periods. The quantity of the good consumed in period 1 and period 2 are q1 and q2. The price of each unit of the good is $1 in both periods. The consumer’s income is I1=10 in the first period and I2=12 in the second period. The consumer can borrow or save money at the interest rate of 50%, that is, r=0.50. The consumer’s utility function is u(q1,q2)= q1q2. The optimal choice of q1 is a. 9 b. 10 c. 11 And the consumer will: d. borrow 1 e. save 1 f. borrow 2 g, save 0