EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 8220100605932
Author: Blinder
Publisher: Cengage Learning US
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Chapter 26, Problem 5TY
To determine
Calculate the equilibrium level of
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Check out a sample textbook solutionStudents have asked these similar questions
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…
Assume the following model of the expenditure sector:
S=C+I+G+Nx
TR=100
C=420+(4/5)YD
I=160
G=180
Nx=-40
YD=Y+TR-TA
TA=(1/6)Y
If the government would like to increase the equilibrium level of output (Y) to the full employment level Y*=2,700, by how much should government purchases (G) be changed?
Given the following model of an Economy as follows:-
(10 marks)
C = 50 + 0.7 Yd (Yd = Y-T) (Consumption & Expend)
I = 100
(Investment Expend)
X = 20
(Exports )
M = 10 – 0.27
(Imports)
T=25 interepret the consumption Function
i)
Determine Equilibrium level of National Income
ii)
Consumption level at Equilibrium level of Income
iii)
Total import at equilibrium Income
Chapter 26 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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