In the dynamic model, suppose the government is not spending nor taxing. The household consumption demand function in period 1 is CP = 0.6(Y1+ (Y2/R)) and the consumption demand function in period 2 is C = 0.4(RY + Y2). Calculate the trade balance in period 1 when Y₁ = 100, Y2 = 24, and R = 1.2. 12 28 40 52
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- Consider the following IS-LM model: C = 201+0.44YD /= 147+0.25Y-1,043/ G= 313 T = 1,2 MIP = 250 0.04 1.9Y-7,558/ The IS equation is determined to be Y=1777.42-3364.521 The LM equation is given as /=0.04 Initial equilibrium values of Y, C, I, and the real money supply are calculated as Y = 1,643 C=814 /=516 M/P = 2,819 A. the real demand for money rises. OB. equilibrium consumption increases. Now suppose that the central bank cuts the interest rate to 2%. In a graph of the IS-LM model, this causes the LM curve to shift downward (Round your response to the nearest integer.) Following the change in the interest rate to 2%, the value of equilibrium real output becomes Following the change in the interest rate to 2%, the values of the new equilibrium C and/are: C = (Round your responses to the nearest integer.) /= (Round your responses to the nearest integer.) Which of the following statements is not consistent with the effects of an expansionary monetary policy? As the interest rate falls,…Let the national income model be; Y = C + I0 + G , C = a + b ( Y – T) , G = g Y Identify endogenous variables Find the equilibrium national income Find equilibrium consumption(using static equilibrium & matrix algebra bothIn this problem you will work with the IS-MP model to calculate a macroeconomic equilibrium using algebra. The steps are: 1) find the IS equation 2) find the MP equation 3) combine them by substituting the r value from the MP equation into the IS equation Assume C = 1 + 0.75Y - 0.5T - 25r, I = 19 - 75r, G = 12, T = 14, the average FFR = 0.05, expected inflation is 3%, the risk premium is 4%, and potential output is 80. What is the output gap in the macroeconomic equilibrium?
- Consider the following model of national income determination C = 3000 + 0.75 (y- t) T = 1000 I= 4750 G = 1500 Y=E=C+I+G Solve for the equilibrium values for all the endogenous variables Suppose the government expenditure increased by 500 find the new equilibrium value Calculate the value of the government spending multiplierConsider the specific Macroeconomic model involving: Private sector consumption: C = 2400+0.8(Y-T); Y = GDP, T = Taxes Tax function: T = 125+0.12Y Business sector investment: I =67+0.08r; r = Rate of interest Government spending: G = 788 Exports: X = 192 - 28x; x = Exchange rate Imports: M = 345+0.09Y+2x; Y = GDP, x = Exchange rate Solve this model for the value of the equilibrium GDP (Y*), given that the interest rate is 7%, and exchange rate is $1.18. Please show all workConsider the specific Macroeconomic model involving: Private sector consumption: C = 2400+0.8(Y-T); Y = GDP, T = Taxes Tax function: T = 125+0.12Y Business sector investment: I =67+0.08r; r = Rate of interest Government spending: G = 788 Exports: X = 192 - 28x; x = Exchange rate Imports: M = 345+0.09Y+2x; Y = GDP, x = Exchange rate Solve this model for the value of the equilibrium GDP (Y*), given that the interest rate is 7%, and exchange rate is $1.18.
- An economy is described by the following: C=20+0.9Y I=120-200r. Md=250+0.2Y-400r. Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find AS and AD. b) Find the equilibrium level of Y and P c) Graphically represent this economy d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).Suppose that a local economy has the following values for Desired C, I, G, and NX at a price levelof 100 given by: C = 6,000 + 0.9(1 − t)YI = 3,100G = 900NX = 2,000 − 0.06YThe tax rate (t) is equal to 10%. For every $1 increase in the price level, AutonomousConsumption (C) and Autonomous Investment (I) each decrease by $1.It also has an aggregate supply (AS) given by: AS = 2p10. What is the Short-Run Real GDP in this economy? Show your work. 11. Is this economy running a primary budget surplus or a primary budget deficit? How largeis it (in dollars)? Show your work. Suppose also that this government has an outstanding debt of $10,000, owed with an interestrate of 1%.12. Is this economy running a total budget surplus or a total budget deficit? How large is it(in dollars)? What is this country’s debt-to-GDP ratio? Show your work. Suppose that the above questions (Q10 – Q11) is only for the year 2010. Assume thateverything is the same (Ceteris Paribus) in 2011 and 2012 as it was in…Q2: 5. Suppose the following information represents current economic conditions and behavior in some cconomy: C= 400 + .75YD where Yp = Y - T, T = 400 and Y = 2000. a. First, graphically depict the above consumption function in C - Yp space (with C on the vertical axis and Yp on the horizontal axis). What does the vertical intercept represem? Explain. What is the slope of this consuniption function? Explain. With Y = 2000, what is the level of consumption for this cconomy? Yp b. Assuming that Y does not change, graphically illustrate (in the above graph), and expluin the effects of a reduction in the marginal propensity to consume to .5. Calculate what happens to the level of consumption.
- Consider an economy that is characterized by the following equations: C= 400 + 0.5 Yd I = 700 - 4000i + 0.1y G= 200 T= 200 (M/P)d - = 0.75Y - 7500€ (MP)== 600 What is the equilibrium consumption (C)?True or False: It is possible, in a basic hours towards leisure and income towards consumption model, that the Earned Income Tax Credit can encourage more hours towards leisure, less hours towards work and more money towards consumption.Consumption function: C = 85 + 0,5Yd Investment function: I = 75 Government spending: G = 70 Net Taxes: T = 0,25Y Disposable income: Yd Y – T Equilibrium: Y = C + I + G You are given the following model for the economy of a country without a foreign sector: (d) Solve for equilibrium income. (Hint: Be very careful in your calculations. They are not difficult, but it is easy to make careless mistakes that produce dramatically wrong results.) (e) How much does the government collect in taxes when the economy is in equilibrium? (f) What is the government’s budget deficit or surplus?