For an economy the following functions have been given: C = 100 + 0.8Y S = -100 + 0.2Y I = 120 – 5r Ms = 120 Md = 0.2Y – 5r Calculate the following: 5.1.1. IS equation 5.1.2. LM equation 5.1.3. Equilibrium level of income
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For an economy the following functions have been given:
C = 100 + 0.8Y
S = -100 + 0.2Y
I = 120 – 5r
Ms = 120
Md = 0.2Y – 5r
Calculate the following:
5.1.1. IS equation
5.1.2. LM equation
5.1.3. Equilibrium level of income
5.1.4. Equilibrium level of interest rate.
5.1.5 Calculate National saving.
5.1.6 Calculate money demand
5.1.7 Find consumption
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- Consider an economy described by the following equations:Y=C + I +GY=7,000G=4000T=2,000C=150+0.75(Y-T)I=1,000-50rc. Now suppose the G rises by 1,000. Compute private saving, public saving, andnational saving and show a graphical representation of your answer.Y6 4.) The following equations describe an economy. Y = C + I + G C = 50 + 0.7(Y-T) I = 108 -200r G = 120 T = 120 (M/P)d = 2Y -200r M = 1000 P = 1 a.) Use the relevant set of equations to derive the IS curve. Graph it on an appropriately labeled graph. b.) Use the relevant set of equations to derive the LM curve. Graph it on an appropriately labeled graph. c.) What is the equilibrium level of income and the equilibrium real interest rate? d.) Now consider that the LRAS curve is Y = 600. Draw the LRAS curve on the IS-LM Model and the AD-AS Model for this economy. (Remember, P= 1) e.) What will happen for this economy to reach long run equilibrium?Suppose GDP in this country is $480 million. National Income Account Value (Millions of dollars) Government Purchases (GG) 150 Taxes minus Transfer Payments (TT) 180 Consumption (CC) 225 Investment (II) 105 Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table. Private SavingPrivate Saving = (YTI, TG, YCT) = = ?million Public SavingPublic Saving = = (CT, TG, YCT, YTI) = = $million
- Based on the information presented below, what is the equation representing the saving for this economy? GDP (Y) $0 100 200 300 Cunsumption (C) $60 120 180 240 Oa. S = -60 + 0.6Y O b. S = 60+ 0.4Y O c. S = -40 +0.75Y O d. S= -60+ 0.4Y Saving (S) S-60 -20 20 60 Investment (1) $100 100 100 1005. Consider the following is the economy of Country Z: C = 200 + 0.85Y I = 100 Answer the following questions: (a) Calculate the equilibrium level of output algebraically using the saving-investment (S-I) approach. (b) What is the value of saving at the equilibrium output from part (a)? (c) Suppose the investment increases to 200. What is the new equilibrium level of output? Calculate the value using the multiplier approach.1. What are the two major differences between the CPl and the GDP deflator index? (5 marks) 2. Define private saving, public saving, national saving, and investment. How are they related? (5 marks) 3. Give an example of an event that would shift the aggregate-demand curve. Which way would this event shift the curve? (5marks) 4. a. What are the four expenditure components of Gross Domestic Product (GDP)? Explain each of these. (10 marks) B. Define real GDP and nominal GDP. Which is a better measure of economic well-being? (10 marks) 5 a) Explain briefly what the consumer price index measures and how it is constructed. (10 marks) b) Describe the three problems that make the consumer price index an imperfect measure of the cost of living. (10 marks)
- Suppose GDP in this country is $900 million. Enter the amount for consumption. Value National Income Account (Millions of dollars) Government Purchases (G) 250 Taxes minus Transfer Payments (T) 325 Consumption (C) Investment (I) 275 Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table. National Saving (S) 2$ million Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table. Private Saving million Public Saving 2$ million Based on your calculations, the government is running a budgetAssume an economy where spending for each sector is: Household: C = 800 +0.95Qd Business: I=3000 Public: G = 4,000, Tr = 7,000, Tx = 1,000 + 0.3Q Foreign X = 1,700 , Im = 200 + 0.165Q 2. Solve for autonomous spending 3. Spending Multiplier 4. Disposable Income 5. Consumption Expenditure 6. Household Saving 7. Imports 8. Net Exports 9. Government Expenditure 10. Budget DeficitThe gross domestic product (GDP) of Country A is $2 trillion in year 1. What value of investment will increase its GDP to $4.5trillion in year 2? (present your result in the nearest billion dollars, i.e., no decimal places) Assume that the average disposable income and consumption (in real $) of this country's citizen are provided in the table below. Year Income Consumption 1 60,000 50,000 64,726 51,259
- Graphically illustrate the aggregate consumption and saving functions. Explain these functions with at least 200 words. You may give examples.Suppose GDP in this country is $660 million. Enter the amount for government purchases. National Income Account Government Purchases (G) Taxes minus Transfer Payments (T) Consumption (C) Investment (I) Private Saving = Complete the following table by using national income accounting identities to calculate national saving. In preceding table. National Saving (S) = $ Public Saving = $ = $ Value (Millions of dollars) Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table. million million million 195 300 210 calculations, use data from the Based on your calculations, the government is running a budgetSuppose that GDP is $8 billion, taxes are $1.5 billion, private saving is $0.5 billion, and public saving is 0.2 billion. Assuming the economy is closed, calculate the size of:(i) Consumption (ii) Investment (iii) Government Spending (iv) National Savings b. Explain the difference between saving and investment as defined by a macroeconomist. c. Which of the following situations in c (i) & c (ii) represent investment? Saving? Explain(i) Your family takes out a mortgage and buys a new house. (ii) You use your paycheque to buy stock in Sagicor Financial Services.
