The following values represent country A C=$160, S=$40, T=$0, Y=$200 and I=$30, T=0 and G=0 The households consume 80 percent of their income, and save 20 %. MPC = 0.8 and MPS = 0.2. That is, C = 0.8Yd and S = 0.2Yd. a) Is the economy of country A in equilibrium? What is the equilibrium level of income? b) If the full employment level of Y is supposed to be $250, what fiscal policy should the government follow?
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The following values represent country A
C=$160, S=$40, T=$0, Y=$200 and I=$30,
T=0 and G=0
The households consume 80 percent of their income, and save 20 %.
MPC = 0.8 and MPS = 0.2.
That is, C = 0.8Yd and S = 0.2Yd.
a) Is the economy of country A in equilibrium? What is the equilibrium level of income?
b) If the full employment level of Y is supposed to be $250, what fiscal policy should the government follow?
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- The following equations describe an economy: Y = C + I + G + X – M [where X=exports, M=imports] C = 150 + 0.7*(Y - T) T = 30 I = 300 G = 60 X = 140 M = 100 + 0.2*(Y - T) Which of the following statement is true? The value of the government spending multiplier is 3.33. If exports increase by 10, equilibrium Y will increase by 20. If government spending increases by 40, equilibrium Y will increase by 333. Without any changes, the equilibrium level of Y is 2167.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…In the Republic of Nurds, assume that in 2011 the following prevails:Y= $200 G= $0 C= $160 T= $0 S= $40 I (planned) = $30Assume that households consume 80 percent of their income, they save 20 percent of their income, MPC =0.8. That is C =0.8Yd. Is the economy of Nurd in equilibrium?
- Consider a hypothetical economy where there are no taxes and no international trade. Households spend $0.60 of each additional dollar they earn and save the remaining $0.40. If there are no taxes and no international trade, the oversimplified multiplier for this economy is __________. Suppose investment spending in this economy increases by $250 billion. The increase in investment will lead to an increase in income, generating an increase in consumption that increases income yet again, and so on. Fill in the following table to show the impact of the change in investment spending on the first two rounds of consumption spending and, eventually, on total output and income. Now consider a more realistic case. Specifically, assume that the government in our hypothetical economy collects income taxes. In this case, the multiplier will be ______ (options: the same as, smaller than, larger than) the oversimplified multiplier you found earlier. Suppose that the price level in our…Real GDP Consumption Planned Investment Government Purchases Net Exports $5,000 $4,500 $500 $325 -125 6,000 5,300 $500 $325 -125 7,000 6,100 $500 $325 -125 8,000 6,900 $500 $325 -125 3 A Answer the questions based on the table below. The values are in millions of dollars. What is the equilibrium level of real GDP? What is the MPC? If potential GDP is $7,000 million, is the economy at full employment? If not, what is the condition of the economy? If the economy is not at full employment, by how much should government spending increase so that the economy can move to the full employment level of GDP?Based on the economic data of a country presented in the following table, complete the table! Question: a. Based on this information, complete the blank data. b. Determine what level of equilibrium income, consumption and savings are at equilibrium c. If there is an increase in government spending by 50 what is the new level of national income. d. how big is the multiplier in this model? What does it mean? e. Draw a graph of the balance of national income and its changes
- The following are exogenous (not directly affected by income): G = 9 I = 14 X = M = 0 The consumption function is: C = k + cY, where k = 8, c = 0.6 What is the equilibrium level of GDP? State to ONE decimal place What is the multiplier for this economy? The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 What is the equilibrium level of GDP? What is the multiplier? Same information as in the previous question: The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 Imagine the maximum potential output or real GDP of this economy is 100. Assume that is the same as saying we reach the edge of the PPF at 100. Now assume we want to get that economy from the current level of GDP to its maximum potential of 100. We can do this in two ways - either increase government spending (G) or reduce taxes, (we…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. 120Suppose that the level of income is $1000 and the tax rate is 0.1 %. Given this data, what is the level of disposable income? Use the following information to answer questions 5 through 8: Consider the following information for Slovenia. Category Amount Autonomous Consumption 430 MPC 0.9 Tax Rate 0.25 Investment 800 Government Expenditure 100 Exports 20 MPI 0.05 What is the equilibrium level of GDP in the income-expenditure model? Suppose that there is a decrease in Exports by $20. What is the new equilibrium level of GDP in the income-expenditure model? What is the difference between the original and new GDP as a result of a decrease in Exports? Suppose that MPC is equal to 0.8. What is the spending multiplier?
- The table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. Real GDP, Y (billions of 2012 dollars) Consumption expenditure, C (billions of 2012 dollars) Investment, I (billions of 2012 dollars) Government expenditure, G (billions of 2012 dollars) 15 6 5 5 20 10 5 5 25 14 5 5 30 18 5 5 35 22 5 5 The marginal propensity to consume in Syldavia is equal to A. 0.40. B. 5.00. C. 0.80. D. 0.75. E. 0.20.In the economy of Keynesian Island, autonomous consumption expenditure is $50 million, and the marginal propensity to consume is 0.8. Investment is $160 million, government expenditure is $190 million, and net taxes are $250 million. Investment, government purchases, and taxes are constant—they do not vary with income. The island does not trade with the rest of the world. If the government increases its purchases by $200 million, what will be the change in the economy's equilibrium real GDP? Show the change on the graph as well.Good day . can you please assist on the following question below Multiple-choice questions: Select one correct answer for each of the following. Q.1.1 Which of the following represent injections into the circular flow of income and spending?(a) Exports and investment;(b) Government spending and imports;(c) Government spending and saving;(d) Imports and saving. Q.1.2 In the circular-flow diagram, the goods markets are where: (a) The households purchase goods from firms;(b) Firms purchase goods from government;(c) Firms purchase goods from households;(d) The government purchases goods from households. Q.1.3 Money overcomes the problem of a double coincidence of wants inherent in the barter system through its function as a:(a) unit of account.(b) store of value.(c) medium of exchange.(d) standard of deferred payment.
