Suppose GDP = $10,000, autonomous consumption is $600 and planned investment spending is $350, the marginal propensity to save is 0.75, and there is no Government and no foreign sector. What is the equation of the Planned Aggregate Expenditure (AE) function? AE=0.20Y + 300 AE=0.80Y + 500 AE=0.80Y + 900 AE=0.25Y + 950
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- If Y = 500 TL, c = 80% and C0 = 30, what is the consumption expenditure?What is the meaning of "animal spirits"? How do these relate to planned investment spending and to unplanned investment spending?Assume that total expenditure E comprises the sum of government consumption, G, household consumption, C, and investment, I. Assume a closed macroeconomic system, so that income equals expenditure Y=E. If we define household saving, SH, as SH=Y-T-C, where the cunsumption function is a fixed proportion of disposable income, C=c(Y-T), which of the following will be true? a. Higher government spending alongside unchanged taxation will lead to higher investment and higher household saving b. Higher government spending alongside unchanged taxation will have no effect on household saving or investment c. Higher government spending alongside unchanged taxation will lead to higher household saving d. Higher government spending alongside unchanged taxation will lead to lower household saving
- The consumption function for a closed economy with no government sector is given by the equation: C = £200 million + 0.8 Y where C is aggregate consumption and Y is national income. (i) Calculate the value of aggregate savings if the level of national income is £4000 million. Show all your workings. (ii) Calculate the equilibrium level of national income if the level of planned investment is £600 million. Show all your workings. (iii) Calculate the level of aggregate consumption at the equilibrium level of national income if the level of planned investment is £1000 million. Show all your workings. (iv) Calculate the change in national income if planned investment rose from £600 million to £800 million. Show all your workings.Use the information in the table to answer the following questions. All numbers are in billions of 2012 dollars. Planned Investment (1) Real GDP (Y) $14,000 $15,000 $16,000 $17,000 $18,000 The equilibrium level of GDP is $ The MPC is billion. Consumption (C) $11,000 $11,750 $12,500 $13,250 $14,000 $1,500 $1,500 $1,500 $1,500 $1,500 (enter your response to two decimal places). Suppose that net exports increase by $400 billion. Using the multiplier formula, determine the new level of GDP. A $400 billion increase in net exports leads to a change in spending of $ billion, so the new level of GDP will be $ billion. Government Purchases (G) $2,500 $2,500 $2,500 $2,500 $2,500 Net Exports (NX) - $500 - $500 - $500 - $500 - $500Consumption function: C=500+0.8Yd , net tax: T=500, government spending: G=500, investment: I=1200, export: X=500 and imprt: M=700. According to this Calculate the consumption and saving at Ye.
- refer to the following table: Consumption expenditure (C)= 100+ 0.8 Yd Investment expenditure (1) = 120-500/ Government spending (G)-50 Money demanded for Asset purpose = 100-2000 i Money demanded for transaction purpose- 60+0.1 Y Money demanded for precautionary purpose 40 Where i is the interest rate, Y is the real GDP; Yd is the disposable income Suppose Grises by 100 S because of increased expenditure on education. What is the new equilibrium Y? 4600 2444 1444.44 1131.148 2000 Taxes 0.1 Y Current account 0 Demand deposits 60 Saving deposits 30 Currency in circulation-10 Banks reserves-20Please calculate level of GDP in equilibrium, consumption and savings level if you know that: I (investment) = 300 Ca (Autonomous Consumption) = 100 MPS (Marginal Propensity to Save) = 0,1 G (Government Expenditures) = 300 T (net taxe rate) = 0,2Explain and compare the following terms: Saving intensity and break-even investment intensity.
- Consider the Savings-Investment model involving: The Savings function: S = S0+s1Y+s2r; and the Investment function: I = I0+ir; where: Y = GDP, r = interest rate; and equilibrium occurs when Savings equal Investment. (i) Solve for the equilibrium GDP Y* (ii) Using your Y*, find the Investment-Multiplier dY*/dI0Consumption 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?Define the term Projected annual net savings?