ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption C=100+ 0.8Y.Assume further that planned investment lg, government spending G, and net exports Xn are independent of the level of real GDP andconstant at /g=60, G= 0, and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures:Y = C+ Ig+G+XInstructions: Round your answers to the nearest whole number.a. Calculate the equilibrium level of income or real GDP for this economy.$b. What happens to equilibrium Y if lg changes to 40?$What does this outcome reveal about the size of the multiplier?Multiplier =

a. The equilibrium level of income occurs the equality of Y and planned aggregate expenditure (PAE).…

Answered: ADVANCED ANALYSIS Assume that the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. Consider the following information on a 4-sector (“private-public-open”) economy, where Y stands for the GDP and Ca, Ig, and Xn are respectively consumption after tax, autonomous investment and next exports. Ca = 40 + 0.80 (Y-T) Ig = 30 Xn= 10 T=20 G=20 DI-Y-T Use the information above to solve for equilibrium value of GDP (Y), DI, Ca, Sa, and APC, and APS. Show all your calculations. Show the 4-sector equilibrium GDP graphically. What is autonomous consumption, MPC, MPS, and the multipliers for G and T in this economy? If GDP =520, what would be AEa? Will there be unplanned inventory investment or disinvestment? Will GDP increase or decrease? Why? Explain. At GDP=520, what would be planned investment? actual investment?
ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption C= 100 + 0.75 Y. Assume further that planned investment /g, government spending G, and net exports Xn are independent of the level of real GDP and = 60, G= 0, and Xn= 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: constant at Y= C+ lg+ G+ Xn: Instructions: Round your answers to the nearest whole number. a. Calculate the equilibrium level of income or real GDP for this economy. $ b. What happens to equilibrium Yif lg changes to 40? What does this outcome reveal about the size of the multiplier? Multiplier =
Assume that the consumption schedule for a private open economy is such that consumption C = 50 + 0.8Y. Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 30 and Xn = 10. Recall also that, in equilibrium, the real output produced (Y ) is equal to aggregate expenditures: Y = C + Ig + Xn.a. Calculate the equilibrium level of income or real GDP for this economy.b. What happens to equilibrium Y if Ig changes to 10? What does this outcome reveal about the size of the multiplier?
ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption C= 100 + 0.9 Y. Assume further that planned investment /g, government spending G, and net exports Xn are independent of the level of real GDP and constant at lg= 60, G= 0, and Xn= 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y= C+ lg+ G+ Xn. Instructions: Round your answers to the nearest whole number. a. Calculate the equilibrium level of income or real GDP for this economy. $ b. What happens to equilibrium Yif lg changes to 40? 2$ What does this outcome reveal about the size of the multiplier? Multiplier =
In an economy, consumers spend 800 million regardless of their level of disposable income. In addition, they spend 75% of their yearly disposable income. * Investment is fixed at 250 million, Gvt expenditures are 120 million, net taxes are 100 million, exports are 170 million. Imports are 15% of the level of disposable income. Q, what is this economies equilibrium level of output Q how much would net export be when this economy is at equilibrium output
Assume that total expenditure E comprises the sum of government consumption, G, household consumption, C, and investment, I. Assume a closed macroeconomic system, so that income equals expenditure Y=E. If we define household saving, SH, as SH=Y-T-C, where the cunsumption function is a fixed proportion of disposable income, C=c(Y-T), which of the following will be true? a. Higher government spending alongside unchanged taxation will lead to higher investment and higher household saving b. Higher government spending alongside unchanged taxation will have no effect on household saving or investment c. Higher government spending alongside unchanged taxation will lead to higher household saving d. Higher government spending alongside unchanged taxation will lead to lower household saving
Given the following consumption function, C = 400 + 0.75YD,where C= consumption expenditure, YD = disposable income, Investment= $1200, Government spending = $1600,Exports = $500, Imports = $600, Taxes = $1200 and Potential GDP = $9000Aactual output is less than potential outputactual output is zeroactual output is equal to potential outputactual output is higher than potential output
Suppose that the level of income is $1000 and the tax rate is 0.1 %. Given this data, what is the level of disposable income? Use the following information to answer questions 5 through 8: Consider the following information for Slovenia. Category Amount Autonomous Consumption 430 MPC 0.9 Tax Rate 0.25 Investment 800 Government Expenditure 100 Exports 20 MPI 0.05 What is the equilibrium level of GDP in the income-expenditure model? Suppose that there is a decrease in Exports by $20. What is the new equilibrium level of GDP in the income-expenditure model? What is the difference between the original and new GDP as a result of a decrease in Exports? Suppose that MPC is equal to 0.8. What is the spending multiplier?
n an effort to make sales projections, M/s K, B and A, the three B-school executives of Vengaboys Inc., were discussing about the national income and its growth in Ibiza. K had estimated a linear consumption function for Ibiza to be C = 100 + 0.6 Y, and investment to be I = 100 per ear. In Ibiza, there was no income tax and government spending was minimal (assume 0). Ibiza was a closed economy, and hence no exports and imports. (i)K immediately knew what the investment Multiplier was. Can you find out? (ii)What is the level of income in Ibiza? (iii)K estimated that with Government spending 100 on a new road to be constructed, the income levels are sure to go up. K quickly calculated the change in income and the new income level to be:
refer to the following table: Consumption expenditure (C)= 100+ 0.8 Yd Investment expenditure (1) = 120-500/ Government spending (G)-50 Money demanded for Asset purpose = 100-2000 i Money demanded for transaction purpose- 60+0.1 Y Money demanded for precautionary purpose 40 Where i is the interest rate, Y is the real GDP; Yd is the disposable income Suppose Grises by 100 S because of increased expenditure on education. What is the new equilibrium Y? 4600 2444 1444.44 1131.148 2000 Taxes 0.1 Y Current account 0 Demand deposits 60 Saving deposits 30 Currency in circulation-10 Banks reserves-20
Problem 1: You are given the following model for the economy of a country: Consumption function: C=2000+0,75-YDI Investment function: I=10500 Government spending: G = 12000 Tax function: T=200+0,4·Y - Disposable income: YD = Y -T+TR Transfer: 1000 a) What is the level of equilibrium output? b) What is the new equilibrium output if investment decreases by 2 000 units? c) How much does the government collect in taxes when the economy is in equilibrium? d) What is level of the government’s budget? e) Calculate the tax multiplier? f) Calculate consumption at the equilibrium output.
Q.30. C = 100 + 0.4 Y is the Consumption Function of an economy where C is Consumption Expenditure and Y is National Income. Investment expenditure föfeign exchange etc. financing, is 1100. Calculate: () Equilibrium level of National Income.

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