EBK ECONOMICS: PRINCIPLES AND POLICY
13th Edition
ISBN: 9781305465626
Author: Blinder
Publisher: CENGAGE LEARNING - CONSIGNMENT
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Question
Chapter 26.A, Problem 5TY
(a)
To determine
Calculate the equilibrium level of GDP.
(b)
To determine
Check whether the savings is equal to investment.
(c)
To determine
Calculate the equilibrium level of GDP and savings.
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Students have asked these similar questions
In an economy with lump-sum taxes and no international trade, if the marginal propensity to consume is 0.8, which of the following is true?
A. When consumption increases by RM5, investment increases by a maximum of RM1.
B. When consumption increases by RM5, savings increase by a maximum of RM1.
C. When investment increases by RM1, income increases by a maximum of RM5.
D. When investment increases by RM1, consumption increases by a maximum of RM5.
6. You are given the following data concerning Freedonia, a leg-
endary country:
(1) Consumption function: C = 200 + 0.8Y
(2) Investment function: I = 100
(3) AE = C + I
(4) AE = Y
a. What is the marginal propensity to consume in Freedonia,
and what is the marginal propensity to save?
b. Graph equations (3) and (4) and solve for equilibrium
income.
C. Suppose equation (2) is changed to (2´) I = 110. What is
the new equilibrium level of income? By how much does
the $10 increase in planned investment change equilibrium
income? What is the value of the multiplier?
Use the information below to answer the following questions.
Suppose that in China, investment is ¥190 billion, saving is ¥170 billion, government expenditure on goods and services is ¥195 billion,
exports are V230 billion, and imports are *270 billion (Y is yuan, the currency of China).
The government received
billion in tax revenues.
The government has a budget
investment by
and
investment.
equal to
billion which is exerting a(n)
the demand for loanable funds, which
influence on
the real interest rate
Chapter 26 Solutions
EBK ECONOMICS: PRINCIPLES AND POLICY
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