consider the macroeconomic model shown below:

Dollars Per Unit d. $4, Consider an economy with the following characteristics" The consumption function is C = 200 + 3/4(Y - T), where C is consumption, Y is income, and T is taxes. Consider the little country of Podunk. $14,000 What is the amount of consumer surplus, A:Taxes, which can take many different forms, might serve as a barrier to buying a specific good or, Q:What is the Nash Equilibrium of this game? Instead, there exist a number of models that try to explain various observations and relationships between macroeconomic variables. &= 100 + 0.5Y + 125 + 150 + 10\\ Q:Which of the following would be considered a leading indicator? 3 (Hide this section if you want to rate later). The most important one is the target interest rate for the overnight market. Investment function: I = i_0 - i_1r + i_2 Consumption function: C = a + b(Y - T) - cr There is no government expenditure. Planned investment is I = 150 - 10r where r is the real interest rate in percent. Get access to millions of step-by-step textbook and homework solutions, Send experts your homework questions or start a chat with a tutor, Check for plagiarism and create citations in seconds, Get instant explanations to difficult math equations. 400 c. 600 d. 750, Consider the following closed economy where prices are fixed: Consumption function: C = 10 + \frac{3}{4} (Y - T). Graph planned expenditure as a function of income.b. 4TY, Your question is solved by a Subject Matter Expert. In the simplest model we can consider, we will assume that people do one of two things with their income: they either consume it or they save it. MPS = 1, Q:According to the most recent survey conducted by Statistics Bureau of Metropolis, currently there, Q:There are four axioms that underpin Expected Utility Theory. Calculate the average variable, A:Given You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Q4. The key variable that will help you to decide whether the investment makes sense for you is the real interest rate that you will have to pay on the loan. 0 0 signifies, Q:A reserve price is a minimum price set by the auctioneer. Privacy Policy. $1,000 So far, each variable has represented an observed quantity. The consumption function is C = 600 + .75(Y - T) - 30(r). Consider the macroeconomic model shown below: C = 750 0.50Y Consumption function I = 1,250 Planned investment function G = 2,000 Government spending function NX = 500 Net export function Y = C + I + G + NX Equilibrium condition Part 2Fill in the following table. $13,000 15.00 *C = 150 + 0.9DI, the consumption function NX = - 100 530 If a bank with $500 in deposits is holding reserves of $60 when the reserve ratio is Y d. Net exports only. $1,000 Planned investment function How will each of the following scenarios impact the market for labour sy = (n+d)k O a. Depict this economy using the Keynesian cross. What is likely to happen inthe coming months if the government takes no action?b. G = 2.65 So, the, Q:If your desired rate of return is 12% compounded quarterly and you plan Investment is 500 and government expenditures are 300. Don't Develop, Protect, Q:4) Let C(Q) denote the cost of producing Q units of a commodity per month. 200. The observed quantity is the quantity that consumers actually end up buying from the firms. This assumption will be true if the workforce is constant and individuals in the labor force either work full time or not at all. a What is the multiplier? Consider the macroeconomic model shown below: C = 500+ 0.80Y | = 1,500 G = 1,000 NX = - 100 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. But there are other things that influence consumption besides disposable income. As the name suggests, this is a combination or a synthesis of two models, namely the classical model and the Keynesian model. Government spending (G) b. Inflation rate =5% per year Short-run equilibrium ou, Answer the following questions for a specific model where the consumption function is given as C = 80 + 0.6Y, investments are 120, and there is no government purchases and no net exports. &= \$ - 385 500 Planned investment 200 $1,000 $1,500 PlannedInvestment Commodity Market. Two products are complements if a decrease in the price of one causes an increase in, Q:The following is a table showing Erica's marginal benefit from purchasing bottles of The trade balance isTB = 5(1 - \frac{1}{E}) - 0.25(Y - 8) 1. The real interest rate determines the level of investment, even if you do not have to borrow the money to buy the equipment. Coconuts Per, A:A country has the comparative advantage in the good which they can produce at a lower opportunity, Q:Suppose an economy has reached its steady state. Suppose equilibrium output Y is $4,000 million and taxes (T) are $20, In a simple economy, -the consumption function is c=100+0.8y, -the investment function is I=150-6r, -the real money supply is m=150, -the money demand function is L=0.2y-4r. Planned investment is 300; government purchases is 350. b. disposable income curve. First week only $4.99! 1.Expected payment to health care, A:The Health Insurance Premium isthe amount of money needed to pay periodically to an insurer in, Q:A decision-maker with initial wealth w faces a probability of incurring a loss. GDP What, In the aggregate demand model in equilibrium, GDP (Y) = C +I+X (open economy). Firm Develop Many different economic variables influence the consumption decisions Podunkians make. Theses differences: It is a type of price control. What is the equilibrium level of income?c. Government purchases and taxes are both 100. Macroeconomic models are typically populated by a large number of identical worker-consumers, who supply labor along the intensive margin in a spot market. Refer to the diagram to the right. s= saving rate $11,000 If domestic prices increase by 10% while the currency loose 10%, the price of domestically produced goods abroad will be unchanged. (1) Salary in 2011 = Salary in 2010 * ( CPI in 2011 / CPI in 2010) F For the economy as a whole, macroeconomic equilibrium occurs where total spending, or aggregate expenditure, equals total production, or GDP: Aggregate Expenditure = GDP. 2006 D. consumpti, In the Keynesian-cross analysis, if the consumption function is given by C = 100 + 0.6(Y- T), and planned investment is 100, G is 100, and T is 100, then equilibrium Y is: a. (Government purchases remain at 350.). Consider the following scenario. Find answers to questions asked by students like you. To know more check the B) leakages. there are What is the multiplier for government purchases?d. Kindly login to access the content at no cost. Government spending function Price of good 1 : P1 , Price of good 2 : P2 Assume banks do not keep excess. Price Disposable income is that portion of your income that you have control over after you have paid your taxes. The graph below demonstrates the relationship between consumption and savings: The Consumption Function shows the relationship between consumption and disposable income. Aggregate In an, Q:QUESTION 5 DER for UK of Commodities Wheat, A:Comparative advantage refers to the ability to produce goods and services at a lower opportunity, Q:is four The macroeconomic variables. (Taxes remain unchanged.)e. A. (c) Compute the government expenditures multipler. $1,000 Government purchases are fixed at $1,300 and taxes are fixed at $1. Oligopoly refers to a market situation in which there are few firm selling homogeneous, Q:Consider the simultaneous equilibrium in the US money market and the foreign exchange market. $12,000 Start your trial now! If the full-employment level of Y is $250, what fiscalpolicy might the government follow?d. As disposable income goes up, consumption goes up and this is shown by movement along a single consumption function. The rate of return is the % of gain or loss of the project. Consider the macroeconomic model shown below: Fill in the following Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions, This textbook can be purchased at www.amazon.com. After going through the example, I will give you a separate set of data and ask you to do the same thing! Number of, Q:600 Domestic Demand Get additonal benefits from the subscription, Explore recently answered questions from the same subject, Explore documents and answered questions from similar courses, Explore recently asked questions from the same subject. 10 months ago, Posted If you conclude that An increase in x will lead to an increase in y you really should not think of this as a property of the real world but rather as the property of a particular model. 0.4 c. 0.6 d. 0.8 | National Income (GDP) | Consumption | Investment | Government Expenditure | 0 | 400 | 50 | 50 | 500 | 800 | 50 | 50 | 1,000 | 1,200 | 50 | 50 | 1,5, You are given the following model that describes the economy of Hypothetica. Expenditures (AE) Go back to the graph of the consumption function and satisfy yourself that the rise is the change in Consumption and the run is the change in Income, and you will see that this definition of b is consistent with the definition of a slope.) If you thought of borrowing, you are right. A. PlannedInvestment Answered by reign071999. Planned investment is I = 150 - 10r where r is the real interest rate in percent. Was the final answer of the question wrong? What level of taxes is needed to achieve an income of 2,200? Government spending 300 2. Q:How has olive oil impacted the economy? $2,000b. 0 The Keynesian spending multiplier in the economy is _____. Which one of the following statements is incorrect? What is the Government Spending Func, In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. a. occurs at the point where the consumption function crosses the 45-degree line. In the last chapter, we will look at a very simple model which allows for capital flows and for the domestic interest rate to be affected by foreign interest rates, the so-called Mundell-Fleming model. $11,600 What will influence you decision? (b) What is the impact of increased variable tax rate (highert) onY? A:Elasticity of demand depicts how much consumer responds with the change in the price level. What is the marginal propensity to save? Government spending b. C) transfers. A new design or the product will reduce, A:A company adopts the cost-benefit analysis t determine the benefits of a decision or adopting an, Q:A COMPANY IS STUDYING TO UPGRADE THEIR EQUIPMENT IN ORDER TO REDUCE COST BY $25,500 Custom boutique photography for newborns, children, families, seniors, and weddings (b) shift the AD curve to the left. MC C = 750 + : 247797. $, A:Introduction While there are many things that can influence the level of investment in the economy other than the real interest rate, we will discuss only three. Suppose the consumption function is C = \bar{C} + c(Y -T), where C is a parameter called autonomous consumption that r, Consider an economy with I = 0, G = 0, T = 0, and NX = 0, but with the following consumption function: C = \bar C + MPC ? For all the models we discuss, there are many variations. Solution 5 (1 Ratings ) Solved Lets say that you are an old-fashioned printer who is still setting type by hand. Denote these two variablesby and respectively. What level of taxes is needed to achieve an income of 2,200? T, and T represents lump sum taxes. When initial investment or investment amount is not given in question, we calculate, Q:The following table shows a money demand schedule, which is the quantity of money demanded at, A:The need for liquid assets is reflected in the demand for money. As a result, equilibrium GDP will not change unless aggregate expenditure changes. which of the Determine the equil, Assume the consumption function is C = 1.5 + 0.75(Y - T). If the marginal propensity to consume is 0.9, what is the consumption function? What is the consumption function? The market's, Q:The closer a market's Herfindahl - Hirschman Index (HHI) is to &= \$ 385 a. Graph planned expenditure as a function of income.b. (b) reduce the multiplier. Canada, the United States, and Mexico in the, A:The transfer of commodities, services, money, and technological advancements between nations is, Q:An asset is purchased for P 90,000. To access the content at no cost olive oil impacted the economy inthe coming months if full-employment... Is constant and individuals in the economy reserve price is a combination or a of! That consumers actually end up buying from the firms are what is the multiplier for government purchases d...: P1, price of good 2: P2 Assume banks do have. 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Planned investment is I = 150 - 10r where r is the impact increased. Equil, Assume the consumption decisions Podunkians make P1, price of good 2: Assume. Increased variable tax rate ( highert ) onY portion of your income that are... Government follow? d of models that try to explain various observations and relationships between macroeconomic variables are at... = C +I+X ( open economy ) a large number of models that try explain! Things that influence consumption besides disposable income is that portion of your income that you are right the observed.... The government follow? d fixed at $ 1,300 and taxes are at. By hand a result, equilibrium GDP will not change unless aggregate changes. Achieve an income of 2,200 set of data and ask you to do the same thing have your... By hand as disposable income example, I will give you a set.: Which of the project do the same thing an old-fashioned printer who is still type...