The following information is provided about an open economy with a government. Use the information to answer the questions that follow: C = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 155 Calculate the equilibrium level of income (Hint: use the multiplier method) Then calculate the tax revenue to the government of this country when the economy remains in equilibrium
Q: An initial increase in investment spending will generate: Less of an increase in income…
A: The amount of desired investment would rise as a result of an increase in investment, which would…
Q: In a closed economy, consumers spend $300 regardless of the level of income, and the marginal…
A: closed economy can be defined as one of that has no trading activity with outside economies its…
Q: US Real GDP fell by 9 percent during the 2nd quarter of 2020. Real investment spending fell by 16.9…
A: Investment implies consumption on capital spending, for example purchasing new machines, building…
Q: Question 2 The following information is provided about an open economy with a government information…
A: Hello. Since your question has multiple sub-parts, we will solve first three sub-parts for you. If…
Q: Create a closed economy that is in a state of equilibrium at first. Assume that public saving…
A: The state of the economy i.e. being open or being closed results in different analyses of what…
Q: An economy with no government and no foreign trade tends to move toward equilibrium GDP because at…
A: GDP is the gross domestic product, the total of all the products, items, services, produced or…
Q: Question 2 Clearly distinguish between each of the following terms: 4.1 Injection and withdrawal 4.2…
A: 4.1 Injection and withdrawal Injections: Injections can be defined as the amount of money that is…
Q: Q9. For each of the following sets of data, determine if output will need to increase, decrease, or…
A: AD = C+I+G where C= C+cYd
Q: Using the data below show the five basic methods to derive equilibrium income & the value of the…
A: (a) In private closed economy equilibrium, Y = C + I Y = 900 + 0.6Y + 100 0.4Y = 1000 Y = 2500…
Q: Using more data points results in an estimated MPC of 0.65 for Africa. In December, the Africa…
A: How much investment going to multiply in the economy depends on how much the household sector…
Q: Will an economy with a high multiplier be more stable or less stable than an economy with a low…
A: In economical aspects, a multiplier extensively alludes to a monetary factor that, when expanded or…
Q: Consider a hypothesis economy described by the following equation C=100 I=1200 X-1110…
A: National income: - national income is the market value of all final goods and services produced in…
Q: Suppose the United States economy is represented by the following equations: Z = C + I + G…
A: Z= C+I+G C = 500 + .5YD T = 600 I = 300 YD = Y - T G = 2000 a)…
Q: briefly explain the role of the open economy multipliers?
A: If a country has a closed economy, then it is said to be a self-sufficient economy. The country’s…
Q: If consumption is C=100+0.75Yd Taxes is T=50+0.5Y Export is X=200 Import is M=50+0.25Y…
A: Consumption is C=100+0.75Yd Taxes is T=50+0.5Y Export is X=200 Import is M=50+0.25Y Government…
Q: Describe a situation in an economy that John Maynard Keynes would believe needs government support.…
A: John Maynard Keynes was the well-known economists whose theories and models are still studied and…
Q: The multiplier process can occur when a decrease in investment spending...
A: The multiplier process explains the vicious circle formed by the economic transaction.
Q: Consider a small economy that is closed to trade, so that its net exports are zero. Suppose that the…
A:
Q: The following information is provided about an open economy with a government. Use the information…
A: Note:- Since we can only answer up to three subparts, we'll answer the first three. Please repost…
Q: To find aggregate planned expenditures, which of the following must be added to consumption…
A: There are four fundamental total uses that go into computing GDP: utilization by families, a venture…
Q: Q.1.1 Which of the following represent injections into the circular flow of income and spending?…
A: The circular flow diagram is a model that shows how a particular economic system works by…
Q: If investment and consumption expenditures fall and cause GDP to fall, what is an appropriate…
A: The fall in the investment and the consumption expenditures would result in the fall in the…
Q: Consider the following open economy: C = 40 + 0.85x YD I = 1500 G = 1600 X = 240 M = 0.12x Y TR = 10…
A: C = 40 + 0.85*YD Differentiate C w.r.t YD to get MPCD MPCD = dc / dYD => MPCD = 0.85…
Q: 36) An automatic fiscal stabiliser is A) a monetary or fiscal policy that aims to smooth out…
A: The business cycle occurs when there is ups and downs in the gross domestic product along its trend…
Q: Explain why the multiplier in an open economy is different from the multiplier in a closed
A: *Answer:
Q: Consider a closed economy without a government. If the GDP of the economy is $63,000 and the…
A: When the economy is closed and there is no government, then GDP = C + I Where C is consumption and I…
Q: Given the following variables in the open economy aggregate expenditure model, autonomous…
A: Note: Since, you've posted question with multiple sub-parts, we will solve the first the first three…
Q: Consider the following model of an economy with no international trade, and in which the price level…
A: The consumption of the economy, the planned investment and the government expenditure along with the…
Q: The following information is provided about an open economy with a government. Use the information…
A: Hi, thanks for the question. Since there are multiple questions posted, we will answer first three…
Q: In a simple economy where there is no government and no international trade, the consumption…
A: People generally use their income on consumption or save it for future needs. The consumption…
Q: Which of the following equals Aggregate Expenditures in a closed economy? Select one: a. none of the…
A: Aggregate Expenditure is the total expenditure done in the production of goods and services in an…
Q: The following information is provided about an open economy with a government. Use the information…
A: "Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts…
Q: If the government reduces government purchases, then what happens to the real interest rate in a…
A: The fall in the government purchases will cause aggregate demand and output to fall. The fall in the…
Q: Total output of an economy can be divided into its alternative uses by considering who bought the…
A: Gross domestic product is the value of all final goods and services produced in an economy over a…
Q: Consider the following closed economy: C = 30 + 0.87 x YD. 1= 2400 G = 2000 TR = 30 T = 0,40 x Y If…
A: An economy is closed when there are no trading activities with the outside economies. The formula…
Q: Which of the following would be considered an expansionary supply-side policy? a)an increase in…
A: In an economy, supply-side policies refers to the given action to influence the total output…
Q: Consider two economies, A and B. Economy A has a marginal propensity to consume of 0.9, a net tax…
A: the marginal propensity to consume is a metric that quantifies induced consumption, the concept that…
Q: Suppose you heard on the news that the three sectors of a closed economy are all spending more but,…
A: There must have been increase in aggregate supply as well.
Q: if investment spending at each level of output increases by $120 billion, what will equilibrium…
A: Equilibrium Output is the amount of output in an economy where Aggregate Demand equals Aggregate…
Q: Suppose an economy is represented by the following equations. Consumption function…
A: Given: C = 300 + 0.8 YdI= 400G = 500Exports (EX) = 200Imports (IM) = 0.1 YdAutonomous taxes (T) =…
Q: Create an example (make up your own numbers) for a virtual open economy with import as a function of…
A: Suppose that there is an open economy A. His total GDP or income will be denoted by the following…
Q: Assume that the consumption function for the above economy is C = 1000 + .75Yd fill in the empty…
A: Understanding of the level of consumption, investment and government expenditure helps find the…
Q: Which of the following statements are correct? a. If the marginal propensity to consume increases,…
A: MPC has defined as the proportion of a raisin the pay of the consumer that he spends in the market,…
Q: Briefly analyse the difference between a closed economy and an open economy
A: Macroeconomics is a part of economics that deals with production, decision and allocation concerning…
Q: The following information is provided about an open economy with a government. Use the information…
A: We the following information about an open economy with a government- C = 450 + 0.4Y (Consumption…
The following information is provided about an open economy with a government. Use the information to answer the questions that follow:
C = 450 + 0.4Y I = 350
G = 150
X = 70
Z = 35 + 0.1Y T = 0.15Y
Yf = 155
Calculate the equilibrium level of income (Hint: use the multiplier method) Then calculate the tax revenue to the government of this country when the economy remains in equilibrium
Step by step
Solved in 2 steps
- For the goods market of an open economy to be in equilibrium, the interest rate must be at 2% when GDP equals 120. We also know the following about consumption (C), investment (1), fiscal policy (taxes T and government expenditures G), imports (M) and exports (X) of the country: C = 20 + b*Y_{D} I = 44 T = 60 G = 22 M = 16 X = 32 where b is the marginal propensity to consume and Yo is net disposable income. What is the value of total consumption? Select one: a. 18 b. 20 C. 38 d. 120Assume that the foreign economy is characterized by the same equations as the domestic economy (with asterisks reversed). Use the two sets of equations to solve for the equilibrium output of each country. (Hint: Use the equations for the foreign economy to solve for Y* as a function of Y and substitute this solution for Y* in part (a).) What is the multiplier for each country now? Why is it different from the open economy multiplier in part (a)?The following information is provided about an open economy with a government. Use the information to answer the questions that follow:C = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550 Q1. Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0% Q2. Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?
- The following question relates only to the equilibrium in the goods market IN A CLOSED ECONOMY and asks you to carry out a graphical analysis using both the Keynesian cross diagram together with the IS-MP diagram a) Suppose the goods market is initially in equilibrium. Suppose the government wants to implement a reduction in the overall level of taxation. What is the effect on output, consumption, investment and interest rates of this tax reduction? Explain and illustrate graphically your answer using both the Keynesian cross diagram in combination with the IS-MP diagram.The following information is provided about an open economy with a government. Use the information to answer the questions that follow: C = 450 + 0.4Y I = 350 G = 150 X = 70 Z = 35 + 0.1Y T = 0.15Y Yf = 1550 Q.2.1 Calculate the level of autonomous spending in this economy. (2) Q.2.2 Calculate the size of the multiplier (Note: Round your answer to two decimal places) (4) Q.2.3 Calculate the equilibrium level of income (Hint: use the multiplier method) (2) Calculate the tax revenue to the government of this country when the economy remains in equilibrium. (2) Q.2.5 Calculate what the new equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%. (6) Q.2.6 Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?The following question relates only to the equilibrium in the goods market IN A CLOSED ECONOMY and asks you to carry out a graphical analysis using both the Keynesian cross diagram together with the IS-MP diagram. >>) Suppose after the government has implemented the reduction in taxation that the central bank wants to keep the level of investment at the same level as before the tax reduction. How can the central bank intervene in the market to achieve this goal? Explain and illustrate graphically how the central bank can keep investment at the same level as before. Is there any additional impact of the central bank intervention on output, consumption and interest rates? If so what is the impact?
- Suppose the following information is about a hypothetical open economy. C= 500+0.8Y , lg = 300 , G= 300 , Xn = 100.calculate equlibrium income, equlibrium consumption, find the new equlibrium income if gross domestic investment decreases to 200 and calculate the multiplier for this macroeconomic model.An open economy presents the following data. The intercept of the consumption function is 4700.The marginal propensity to save (MPS) is 0.20.There are no tax collections in this economy.Government expenditure is 10,000.Autonomous investment is 6,000.The marginal propensity to invest is 0.12.Autonomous exports are 5,000.Autonomous imports are 3,000.The marginal propensity to import is 0.1.Using this information, answer the following four parts. Calculate the equilibrium level of GDP.Calculate the multiplier in this economy.Now suppose that the MPS changes to 0.15. Calculate the new multiplier in this economy.Given the change in the MPS to 0.15, calculate the new equilibrium level of GDPThe following information is provided about an open economy with a government. Use the information to answer the questions that follow:C = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550 Calculate the size of the multiplier(Note: Round your answer to two decimal places)
- Consider the following model of an economy with no international trade, and in which the price level is fixed: C = 40 + (8/9)∙DI I = 30 G = 30 Taxes = (1/8)∙GDP where C is consumption demand, DI is disposable income, I is planned investment, G is government purchases, and all whole numbers are in billions of dollars. Determine the equilibrium level of production (GDP) in this economy (show your work), and draw this equilibrium situation on a graph. Use the multiplier to determine the change in equilibrium GDP that would result from an exogenous 16 billion dollar increase of government purchases. Then determine…Which of the following statements are correct? a. If the marginal propensity to consume increases, the equilibrium level of income will increase. b. In an open economy with a government sector the sum of the marginal propensity to consume and the marginal propensity to save is always equal to 1. c. If the tax rate decreases, the aggregate spending curve will shift parallel upwards. Select one: A. b and c B. b C. a and b D. a and cThe following information is provided about an open economy with a government. Use the information to answer the questions that follow:C = 450 + 0.4YI = 350G = 150X = 70Z = 35 + 0.1YT = 0.15YYf = 1550 Q1. Calculate the level of autonomous spending in this economy. Q2. Calculate the size of the multiplier(Note: Round your answer to two decimal places)