ECON MACRO
5th Edition
ISBN: 9781337000529
Author: William A. McEachern
Publisher: Cengage Learning
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Question
Chapter 6, Problem 2.5P
To determine
The concept of leakages and injections in the Circular flow.
Concept Introduction:
Circular flow of income: It is the visual model which shows how money flows from one sector to another and create equilibrium.
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You take $100 from your bank and spend all of it at A's store. A spends 90% of the 100$ at B's store. B spends 90% of that value (about $81, if you are curious) at C's store. C spends 90% of that value (about $72s if your are curious at D's store. Who spends 90% of that at.....so eventually this spending will come to an end. At the end of all this, how much spending happened? (If you try to solve this by adding up all the spending you are in for a long evening)
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What are some examples of macroeconomics queation?
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E-cigarette users considering quitting E-cig use may wind up taking several tries before successfully stopping:
Now, assuming the typical graph for the MB and MC curve, what would happen if (which curve is shifting and as a result what happens to the optimal quantity of smoking?)
1) a new, highly effective smoking cessation aid became available? Describe what would happen in the graph
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Please give a detailed solution with an explanation. Please double-check your sources and make sure the answer is 100% correct. Make sure ALL questions are answered too.Blank Answer #1:value of all goods and services produced in the economy in the base yearcost of a given market basket of goods and servicesvalue of all goods and services produced in the economy this yearBlank Answer #2:this year's pricesthe base year's pricesBlank Answer #3:value of all goods and services produced in the economy in the base yearcost of a given market basket of goods and servicesvalue of all goods and services produced in the economy this yearBlank Answer #4:this year's pricesthe base year's pricesBlank Answer #5:produced domesticallybought by consumers
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The following equations describe a small economy. Figures are in millions of dollars; interest rate (i) is in percent per annum. Assume that the price level (P) is fixed.
Goods Market
C = Co + cYD (Private consumption)
YD = Y + TR – T (Disposable income)
T = To + tY (Total taxes)
I = Io – bi (Private investment)
G = Go, TR = TRo (Gov. Expenditure and Transfers, respectively)
Y = C + I + G (Goods mkt. equilibrium condition)
Money Market
L = kY- hi (Demand for real balances)
Ms = Mo/P (Real money supply)
L = Ms (Money mkt. equilibrium condition)
Endogenous Variables: C, YD T, I, Y, L, Ms and i
Exogenous Variables: Co = 300, To = 80, Io = 450, Go = 300, TRo = 100, Mo = 350, P =1
Parameters: c = 0.85, t = 0.15, b = 50, k = 0.25 and h = 62.5
Policy…
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An economy is described by the following equations:Expenditure Sector: Money Sector:S = - 200 + (1/5)YD Ms = 400TA = (1/8)Y - 40 Md = (1/4)Y + 100 - 5iTR = 60I = 300 – 10iG = 70 NX = 150 - (1/5)YHere S is saving; TA is taxes; TR is transfers; I is investment; G is government spending; NX is net exports; Ms is money supply; and Md is money demand.a) Find the IS and LM equations for this economy. Draw those equations in an IS-LM framework.b) Find the equilibrium level of output and interest rates. Calculate also the equilibrium values of investment (I), net exports (NX), and money demand (md)
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When comparing National with Regional Input-Output models, the issue of “leakages” often comes up. what is a “leakage? Also explain the impact that a leakage has on an economy’s multipliers and what this means for measure of economic impact
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What are the implications of imbalances between injections and leakages?
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What is stagflation? Discuss a situation that could produce it. Could the situation you have described be avoided? If it can be avoided, should it be avoided and why?
Only typing answer
Please explain step by step
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Using the model of business fluctuations, show the effect of the COVID-19. Recall that COVID-19 shut down production in a series of important U.S. industries and caused considerable job losses. Fear of the virus caused Americans to travel less, buy fewer personal services, and consume fewer restaurant meals.
(b) The Fed responded to the economic effects of COVID-19 by cutting interest rates while Congress passed a large relief package (i.e., an increase in government spending). Show each of these effects on a separate diagram.
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Is the relationship between changes in spending and changes in real GDP in the multiplier effect a direction (positive) relationship or is it an inverse (negative) relation- ship?
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