Consider an economy described by the following: Ć = $3.5 trillion ī = $1.3 trillion G The expression for the MP curve is: = $3.5 trillion = $3 trillion NX = $ - 1 trillion = 1 mpc = 0.75 d = 0.3 X = 0.2 1.5 1.5 r =
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- Consider the following data for a closed economy: Y = $12 trillion C = $8 trillion G = $2 trillion Spublic = $0.50 trillion T = $2 trillion Now suppose that government purchases increase from $2 trillion to $2.60 trillion but the values of Y and C are unchanged. What must happen to the values of S and I? O A. S increases by $0.60 trillion and I drops by $0.60 trillion. B. S and I drop by $0.60 trillion. C. S drops by $0.60 trillion and I increases by $0.60 trillion. D. S and I increase by $0.60 trillion.ADVANCED ANALYSIS Suppose that the linear equation for consumption in a hypothetical economy is C=60 + 0.75Y Also suppose that income (Y is $600. Determine the following values: Instructions: For parts a, b, d, and f, round your answers to 2 decimal places if necessary. For parts c and e, enter your answers as a whole number. a. MPC = b. MPS = c. Level of consumption = $ d. APC= e. Level of saving = $ %3D f. APS %3DDuring the recession of 2007-2009 in the United States, relative to potential GDP. Select one: O a. net export spending rose and consumption spending declined Ob. business fixed investment spending rose and net export spending declined O c. consumption spending rose and residential construction spending declined O d. federal government purchases rose and changes in business inventories declined
- 1. Given the following on a closed economy.C = 40 + 0.8Yd C= consumptionI = 55 – 200r I= InvestmentG = 20 G = government spendingT = 20 T = TaxesYe = 400 Ye = National Income r = rate of interestDetermine the following:-The equilibrium level of consumption-The level of investment-The level of interest rate-The level of Private savings-The level of Public savings-The level of national savings2. Suppose, C=0.8(1-t)Y • t=0.25 •| = 900 – 50i • G=800 a) What is the equation for lIS curve b) What is the effect of increase in govt. expenditure by 100 on the IS equation & IS curve? Show the effect using graphs c)What will happen to the slope of IS curve if Investment becomes more sensitive to interest, say | = 900 – 60i ?Table 1 All Numbers are in $ Billion Output Consumption (Income) Spending Net Taxes Investment Government Spending Spending 200 400 400 100 100 800 700 100 200 100 1,200 1,600 2,000 1,000 1,300 1,600 100 200 100 100 200 100 100 200 100 Refer to Tablel above. At an output level of $1,200 billion, the level of aggregate expenditure is Lütfen birini seçin: O A. $1,200 billion O B $1,400 billion O C. $1,300 billion O D. $1,100 billion O E $1,000 billion.
- Which of the following is likely to have the largest effect on spending? O A. A change in expected future one-year real interest rates O B. A change in the current one-year real interest rate C. Both will have the same effect on spending. D. Neither will have any effect on spending.A $1.5 trillion increase in investment (a component of autonomous expenditure) leads equilibrium expenditure to increase from $7.0 trillion to $10.5 trillion. In this case, the multiplier is O a. 10.5. O b. 4.67. O C. 2.33. O d. 1.50. O e. 7.00.ADVANCED ANALYSIS Suppose that the linear equation for consumption in a hypothetical economy is: C= 60 + 0.7Y Also suppose that income (Y) is $600. Determine the following values: Instructions: For parts a, b, d, and f, round your answers to 2 decimal places. For parts cand e, enter your answers as whole numbers. a. MPC = b. MPS =
- Price Level 110 100 FIGURE 23-5 900 960 O a. 4;3.2 O b. 2.8; 1.2 Oc 4:2.8 O d. 4:1.2 Oe. 6: 1.2 AS1 B 1100 AD₂ AD1 Real GDP Refer to Figure 23-5. Suppose that an increase in government purchases by 50 causes the AD curve to shift to the right, as shown. The simple multiplier is. and the multiplier isFor an economy the following functions have been given:C = 100 + 0.8YS = -100 + 0.2YI = 120 – 5rMs = 120Md = 0.2Y – 5rCalculate 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 consumption5. Suppose the value of corn a household produces is the equivalent of 60 percent of its income and the value of the corn it consumes is the equivalent of 30 percent of its consumption expenditure. Household also earns 30% of their income from selling their family labor and does not purchase any labor. If the price of corn decreases by 40 percent and wage rate increases by 20 percent, calculate: a. Net rice sales as fraction of total consumption expenditure? b. Percentage effect on real purchasing power?