Assume that GDP (Y) = 5,000 Consumption: C = 1,300+(0.4(Y-T)) - 240 r; where r is the real interest rate. Investment (/) is:/= 1,800 - 240 r, Taxes (7): T=250 Government spending (G): G= 1,800 a. What are the equilibrium values of C, Number 1, Number and r Number b. What are the values of private saving Number public saving, Number and national saving Number

Assume that GDP (Y) = 5,000 Consumption: C = 1,300+(0.4(Y-T)) - 240 r; where r is the real interest rate. Investment (/) is:/= 1,800 - 240 r, Taxes (7): T=250 Government spending (G): G= 1,800 a. What are the equilibrium values of C, Number 1, Number and r Number b. What are the values of private saving Number public saving, Number and national saving Number

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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What is the relative importance of consumption spending (C) in aggreagte demand and some factors that affect it? What is the relative importance of investment spending (I) in aggreagte demand and some factors that affect it? What is the relative importance of government spending (G) in aggreagte demand and some factors that affect it? What is the relative importance of Net Export (NX) (Net Export = spending on exports (X) - imports (M)) in aggreagte demand and some factors that affect it?
(a) Assume Consumption (C) is given by the equation C = 500 + 0.6(Y – T). Taxes (T) are equal to 600. Government spending is equal to 1,000. Investment is given by the equation I = 2,160 – 100r, where r = the real interest rate = 13 percent. In this case, what is the equilibrium Gross Domestic Product (GDP)/Total output (Y)/Total income? How does the equilibrium income change if government designs and executes expansionary fiscal policy? Show graphically and mathematically.
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Assume you have the following data for a hypothetical country for a specific year (in billions of ZAR):Wages and Salaries: R2,500Interest: R300Rent: R200Profits: R1,000Taxes (Indirect Taxes Minus Subsidies): R400Depreciation: R500Given the data above, which of the following methods of calculating Gross Domestic Product (GDP) may beused?A. Expenditure approachB. Income approachC. Product approachD. Trade approach
Consider the following table showing national income in billions of dollars. Assume that the marginal propensity to import is 20% and the level of exports is $60 billion. Calculate the level of net exports for each level of actual income and fill in the table below. (Round your responses to the nearest whole number.) Actual National Income (Y) (Billions of $) 200 400 600 800 1000 Net Exports (X-IM) (Billions of $) Now assume that the marginal propensity to import increases to 25%. Calculate the new level of net exports for each level of actual income and fill in the table below. (Round your responses to the nearest whole number.) Actual National Income (Y) (Billions of $) 200 Net Exports (X-IM) (Billions of $) 400 600 800 1000 When we compare these two tables, we can see that for a given level of exports, the higher the marginal propensity to import, the the level of net exports will be at each level of income.
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Consider a closed economy. The profits of private corporations constitute a fraction ?of national income. These profits are subject to corporate tax and a fraction ? of the net profits is distributed to owners. The remaining profits are invested in theeconomy. To encourage investment, the government proposes to cut the corporation tax. The corporation tax is proportional and so is the regular tax but the rates are notnecessarily the same.Analyse the effects of the government proposal assuming that wages and pricesare flexible. Will there be any ambiguity about the results?
Given thatG= 201= 35C = 0.9Ya + 70T= 0.2Y + 25Where, G, I, C, T and Ya are planned government expenditure and planned investment autonomous andconsumption expenditure and tax respectively.Calculate the equilibrium level of national income.
(a) Assume that Gross Domestic Product (GDP)/Total output (Y) is 6,000. Consumption (C) is given by the equation C = 600 + 0.6(Y – T) where T is the tax. Investment (I) is given by the equation I = 2,000 – 100r, where r is the real rate of interest, in percent. Taxes (T) are 500, and government spending (G) is also 500. What are the equilibrium values of C, I, and r?
in an imaginary economy, there is no foreign trade and no government activity. APC = MPC = 0.08. In equilibrium, consumption expenditure is Rs,20, 000 Million. (a) What is ihe level of invesiment expenditure? (b) What is the value of the multiplier (c) Suppose investment spending remains unchanged but both APC and MPC fall to 0.06, what is the new equilibrium level of national income?
Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300 million with the proportion of an increase in income that is spent on consumption is 0.5. An induced tax of 20% is imposed by the country. The amount of investment is RM250 million, and the amount of government spending is RM150 million. (i) Calculate the national income equilibrium. (ii) Based on your answer in (i), show the aggregate expenditure graph.
Suppose GDP is $ 15 trillion, with $ 8 trillion coming from consumption, $ 2.5 trillion coming from gross investment, $ 3.5 trillion coming from government expenditures, and $ 1 trillion coming from net exports. Also suppose that across the whole economy, personal income is $ 12 trillion. If the government collects $ 1.5 trillion in personal taxes, then disposable income will be: a) $ 13.5 trillion b) $ 12.0 trillion c) $ 10.5 trillion d) None of these are correct