10. Consider a one-period economy which experiences the destruction of some of the nation's capital stock (say through a hurricane is de- stroyed). How should this effect equilibrium, consumption, output and labor supply? Now, let's say the government tries to offset some of the declines in capital on output and hours worked by increasing govern- ment spending. What is the likely outcome of this policy intervention in terms of consumption?
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- Imagine there is a consumption smoother (also known as a PIH consumer) who expectsto live for another 40 years and to work for another 30 years. They just learned thatthey will receive a permanent pay increase from their job of $800. How much extra dothey consume this year? What is their marginal propensity to consume?. Suppose the United States economy is repre- sented by the following equations: Z = C + I + G, C = 500 + 0.75YD, T = 600, I = 300, YD = Y − T , G = 2000 Given the above variables, calculate the equilibrium level of output. assume that government spending decreases from 2000 to 1900. What is the new equilibrium level of output? How much does income change as a result of this event? What is the multiplier for this economy?Which of the following will NOT shift the ADTT curve? O a. A rise in consumer confidence O b. A rise in interest rates O c. A rise in government spending O d. A rise in exports
- What is the formula for the marginal propensity to expend? A aggregate expenditures/A national income O b. A autonomous expenditures/A national income O a. O c. A consumption/A national income O d. A national income/A induced expendituresAssume in a simple economy that thc level of saving is -500 when aggregate ourput equals zero and that the margina! propensity to save is 0.2. Derive the saving function and the consumption function, and draw a graph showing these func- tions. At what level of aggregate ouiput does the consumption curve cruss the 45° line? Explain your answer and show this un the graph.hich theory of consumption best explains the consumption behavior of consumers of our economy? Question No: 02 [Marks: 10] If the State Bank started printing large quantities of Pakistani Rupees (Rs), what would happen to the number of Pakistani Rupees a dollar could buy? Why? Question No: 03 [Marks: 10] Deseribe the difference batuuean foreian diract investmet and foraion nortfolie invastment Who is mora likelu to
- We found that for every $1 increase in G there is a multiplied impact on output with, in the most 1 basic model, a multiplier of A study by economists at the New York Fed conducted 1- MPC during the COVID-19 recession found that "as of the end of June 2020, a relatively small share of stimulus payments-ljust] 29 percent-was used for consumption." What is the G multiplier based on that estimated MPC and the formula from the basic model?graph below shows the economy oOT Japan. Planned Aggregate Expenditures 2400- 2100 1800- 1500 1200 AE 900- 600 AE Y 300- Potential Output 00 200 tobd 200d 2400 40 Reset Real income (in dollars) a) What type of gap exists in this economy, and how big is that gap? (Select one) $ 0 b) By how much must government expenditures change to eliminate this gap? (Select one) $ 0 c) Demonstrate this graphically in the graph above. Real aggregate expenditures (in dollars)ON 102 LEC 850 - Winter 2023 - INTRODUCTION TO MACROEC ard / My courses / ECON 102 (LEC 850 Winter 2023) General / S on 12 ed out of on ve Progress Which of the following changes in personal income tax would lead to the smallest increase in consumption? O a. a $30 000 decrease in taxes, if MPC equals 0.25 O b. a $15 000 decrease in taxes, if MPC equals 0.6 O c. a $20 000 decrease in taxes, if MPC equals 0.5 O d. a $12 000 decrease in taxes, if MPC equals 0.75 O e. e. a $10 000 decrease in taxes, if MPC equals 0.2 Previous page Time left 4:58:21 Last saved at 22:40:19 cross out cross out cross out cross out cros ut Finish attempt ... Quiz nav 1 7 2 8 Finish att
- Consider the impact of a cut in the interest rate set by the central bank (the "policy rate"), which causes banks to lower interest rates for both borrowers and lenders. Select one or more: U a. Borrowers like Julia will definitely be better off O b. Borrowers like Julia will definitely increase their current consumption O c. If Marco is a saver (not an investor) he will definitely be worse off O d. If Marco is a saver he will definitely decrease his consumptionWhich of the following policies will NOT shift the Aggregate Expenditure curve upward? Select one: O a. increasing autonomous taxes O b. decreasing autonomous taxes O c. increasing autonomous transfer payments O d. increasing government expenditures on goods and servicesSuppose an economy can be represented by the folowing table, in which employment is in millons of workers and GDP and AE are expressed in billions of dollars: Employment 100 Real GDP Aggregate Expenditures 1275 1350 1425 1500 1575 1650 1200 105 1300 1400 1500 1600 1700 110 115 120 125 fut employment is 120 milion workers? What is its what kind of expenditure oap exists size? Suppose government spending, taxes, and net exports ane all independent of the level of rcal GDP. What is the multplier an ths economy? below the econemy's potential, what is the size of the recessionary expenditure qapt