2. An economy is initially described by the following equations:C= 600 + 0.75(Y - T)I= 1,200 – 50iM/P = Y – 200iG= 2000%3DT= 2000M = 4,000P = 2a. Derive and graph the IS curve and the LM curve. Calculate the equilibrium interest rateand level of income. Label that point A on your graph.b. Suppose that a newly elected president cuts taxes by 20 percent. Assuming the moneysupply is held constant, what are the new equilibrium interest rate and level of income?What is the tax multiplier?1c. Now assume that the central bank adjusts the money supply to hold the interest rateconstant.d. What is the new level of income? What must the new money supply be? What is thetax multiplier?e. Now assume that the central bank adjusts the money supply to hold the level of incomeconstant. What is the new equilibrium interest rate? What must the money supply be?What is the tax multiplier?

Given, C= 600+0.75 (Y-T) I= 1,200- 50i M/P=Y-200i G=2000 T= 2000 M=4000 P=2

Answered: . An economy is initially described by…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Suppose you know the following facts about consumer behavior of Amy in 2019. In a year, Amy spends $10000 on basic household items regardless of how much she is earning. For every dollar of disposable income earned, Amy spends 50% on extra purchases. Amy pays taxes in the amount of $1000, and receives no transfers. Use this information to: Derive Amy’s consumption function in nominal terms. Suppose the price level index in the economy for 2019 is estimated to be P = 2. Rewrite the consumption function in real terms.
For an economy where: C= 75 + 0.7Y |= 125 a) Solve for Y". Include your calculations. b) Draw the AE-Y graph for the economy. Include the intercept and slope of the AE function. c) On your graph from part (b), demonstrate the change that would occur if businesses increase their investment due to a change in interest rates.
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Which of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.
first image is resource. questions starts in the second image (4. and 5.)
n an effort to make sales projections, M/s K, B and A, the three B-school executives of Vengaboys Inc., were discussing about the national income and its growth in Ibiza. K had estimated a linear consumption function for Ibiza to be C = 100 + 0.6 Y, and investment to be I = 100 per ear. In Ibiza, there was no income tax and government spending was minimal (assume 0). Ibiza was a closed economy, and hence no exports and imports. (i)K immediately knew what the investment Multiplier was. Can you find out? (ii)What is the level of income in Ibiza? (iii)K estimated that with Government spending 100 on a new road to be constructed, the income levels are sure to go up. K quickly calculated the change in income and the new income level to be:
Solve all this question......you will not solve all questions then I will give you down?? upvote....
Determine equilibrium levels of income and consumption for the following functions. a.C=20+0.75y,I=20, b.C=50+0.60y and I=30.where C&I, are consumption and investment respectively in billions of naira
How would I do D?
Consider the table on the right, which shows business investment in inventories for each quarter from the first quarter of 2007 to the first quarter of 2012, measured in millions of 2007 dollars. Provide a macroeconomic explanation for this pattern. (Hint: When did the recession during this period begin and end?) The negative growth of inventories indicates a period of OA. inflation since inventories needed to be reduced in the face of increasing storage cost OB. recession because demand was met by drawing down past inventories and production did not increase. OC. recovery since inventories needed to be used to meet demand. OD. recession because inventories increased due to lack of demand Year 2007 2008 2009 2010 2011 2012 2013 Quarter Q1 308889 Q2 Q3 Q4 R288828 Q1 Q2 Q3 Q4 Q1 228892889 Q2 Q3 Q4 Q1 Q2 Inventory Investment (millions of 2007 dollars) $3360 - 2822 15,570 19,644 6061 9512 11,856 4699 -2364 7779 -4807 - 4807 2663 2508 4841 -6805 8965 12,153 6462 2179 2061 7298 14,091 3875…
Planned aggregate expenditure (PAE, billions of $) 1,400 1,200 1,000 800 600 400 200 0 Actual aggregate expenditure (Y, billions of dollars) Type your answers in all of the blanks and submit X₂ X² Ων 200 400 600 800 1,000 1,200 1,400 The following shows the PAE of an economy. Based on the graph, answer the following: 1. PAE equation is PAE = Type your answer here 2. The equilibrium level of output is $ Type your answer here Type your answer here 3. Suppose that planned investment increases by $200. The new PAE equation is PAE = + Type your answer here Y PAE 4. The new equilibrium level of output is $ Type your answer here 5. The multiplier is Type your answer here Y Type your answer here

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