Macroeconomics (9th Edition)
9th Edition
ISBN: 9780134167398
Author: Andrew B. Abel, Ben Bernanke, Dean Croushore
Publisher: PEARSON
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Question
Chapter 4, Problem 6NP
a)
To determine
The equation relating desired national saving, Sd, to real interest rate and output.
b)
To determine
The real interest rate that clears the goods market.
c)
To determine
The change in equation of desired national saving when government purchases rise to 1440.
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Consider a perpetuity with a coupon of 100. Imagine that the perpetuity is purchased at time t when the market interest rate is equal to 5%. Furthermore, imagine that the coupon income is taxed at 40% and that capital gains are taxed at 20%. What is the after tax rate of return if the perpetuity is sold at time t+1 when the market interest rate continues to be equal to 5%?
Assume a model economy with the following parameters:
C=300+0.25 Yd
I=250+0.5Y-2500i
G=350
T=300
(M/P)d= 4Y-16,000i
(M/P)s= 880
Derive the IS and LM relations and solve for equilibrium real output and equilibrium interest rate.
Economists from Funlandia have collected the following information about the economy (all measured in billions of bucks): Y = 12, C= 9, T = 2, and G = 2.5. The economists also estimate the investment function is I = 2 – 0.5r where r is the country’s real interest rate expressed as a percentage. Calculate private saving, public saving, national saving, investment, and the real interest rate.
Chapter 4 Solutions
Macroeconomics (9th Edition)
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 1NPCh. 4 - Prob. 2NPCh. 4 - Prob. 3NPCh. 4 - Prob. 4NPCh. 4 - Prob. 5NPCh. 4 - Prob. 6NPCh. 4 - Prob. 7NPCh. 4 - Prob. 8NPCh. 4 - Prob. 9NPCh. 4 - Prob. 1APCh. 4 - Prob. 2APCh. 4 - Prob. 3APCh. 4 - Prob. 4APCh. 4 - Prob. 5APCh. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Prob. 5WWMDCh. 4 - Prob. 6WWMD
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