8. The income-expenditure model Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is investment, G is government purchases, and T stands for net taxes: c=15+0.75 x (Y-T) Suppose G = $90 billion, I $60 billion, and T - $20 billion. Given the consumption function and the fact that for a closed economy total expenditure can be calculated as Y=C+I+G, the equilibrium output level is equal to S billion. Suppose the government purchases are increased by $50 billion. The new equilibrium level of output will be equal to Based on the effect of the change in government purchases on equilibrium output, you can tell that this economy's spending multiplier is equal to

2. Public consumption of a country (two sectors) is indicated by the function C = 60 + 0.4Y. Calculate:a. Find the saving function.b. If the investment that occurs is 300, determine the balance national income.c. What is the consumption of the people of the country if the national income is 400.d. How much is the savings of the people of the country if the national income is 400.e. Make a graphical sketch of the consumption and saving functions in one image. Please solve sub parts a,b,c thank u

2. Public consumption of a country (two sectors) is indicated by the function C = 60 + 0.4Y. Calculate:a. Find the saving function.b. If the investment that occurs is 300, determine the balance national income.c. What is the consumption of the people of the country if the national income is 400.d. How much is the savings of the people of the country if the national income is 400.e. Make a graphical sketch of the consumption and saving functions in one image. Please solve subparts d,e thank u

7. Marginal propensity to import and net exports The following graph shows net exports for a hypothetical country. U 50 50 40 20 20 NET EXPORTS (Billions of dollars) 10 10 -10 20 -20 300 400 ⑦? 500 600 700 REAL GDP (Billions of dollars) 0 100 200 13 and According to the graph, when the country is producing a real GDP of $400 billion, exports are function is equal to the than imports. The slope of the net exports and thus tells you that for every $1 increase in real GDP, do not change (because they are assumed to be autonomous with respect to real GDP). by

.   Suppose  the  United  States  economy  is  repre- sented  by  the  following  equations: Z  =  C + I + G,  C  =  500 + 0.75YD,  T  =  600,  I  =  300, YD  = Y  − T ,  G = 2000   Given the  above  variables,  calculate  the  equilibrium level  of  output. assume that   government   spending   decreases   from 2000  to  1900.   What  is  the  new  equilibrium  level  of output?  How much does income change as a result of this event?  What is the multiplier for this economy?

4. Deriving net exports By definition, net exports from Japan are equal to exports from Japan minus imports into Japan. In a hypotheticall two-country world, imports into Japan are equal to exports from the United States. So the value for net exports from Japan is equal to exports from Japani minus exports from the United States, Graphically, at each exchange rate, the value for net exports is the horizontal distance from U.S. exports to Japanese exports. Use the graph input tool to answer the following questions. You will not be graded on any changes you make to this graph. (Note: To avoid dealing with decimal places, this calculator reports the price of yen in terms of dollars per 1,000 yen. That is, the price on the vertical axis is the dollar price of a 1,000-yen note instead of a single yen. As you have already seen, a price of 8 dollars per 1,000 yen is the same as 125 yen per dollar. Once you enter a value in a white field, the graph and any corresponding amounts in each grey…

Assume that a nation's marginal propensity to consume (MPC) is 0.75. A highiy productive, cost-cutting technology is developed for the production of commercial airplanes. The total industry expenditure in this nation is $100 million for the immediate acquisition and adoption of this technology. (a) For this nation, identify and explain how much this spending on new technology will change each of the following in the first round: i. Income (GDP) L. Saving i. Consumption (b) Assuming a closed economy and no leakages, identify and explain how much this spending on new technology will change each of the following at the end of the final round: i. Income (GDP) ii. Saving li. Consumption

3. Suppose an economy had aggregate demand components with the following relationships: Consumption Spending, C-140 +0.60*(DY) Investment Spending, I-25 +0.15"Y Government Spending, G-0 Net Export Spending, X=0 Tax Collections, Tx = 0 a. What is the equilibrium income for this economy (Show your work)? b. If the Government decided to Increase G spending by 6, what would be the new equilibrium income for this economy (Show your work)? Page 2 bed tooing c. If instead the Government decided to Reduce Tx (taxes) by 10 (i.e., send checks to people), what would be the new equilibrium income for this economy (Show your work)? d. If instead the Government decided to Increase G spending and Increase Tx (taxes) by 20, what would be the new equilibrium income for this economy (Show your work)?

The table contains information about the nation of Syldavia. There are no income taxes or imports in this nation. Consumption expenditure, C (billions of 2012 dollars) Government Real GDP, Y (billions of 2012 dollars) Investment, / (billions of 2012 dollars) expenditure, G (billions of 2012 dollars) 15 6. 20 10 25 14 30 18 35 22 The equilibrium expenditure is O A. $20 billion. O B. $30 billion. O C. $15 billion. O D. $10 billion. O E. $25 billion.

2. Consider an economy that is characterised by the following set of equations: C co + c¡Yp Yp Y – T I bo + bịY Government spending (G) and taxes (T) are constant. Note that investment (1) is proportional to output (Y). a) Solve for equilibrium output. b) Using your answer derived in (a) identify and discuss the multiplier. How does the relation between investment and output affect the value of the multiplier? c) For the multiplier to be positive what condition must be satisfied? Please note: The two questions are equally weighted in terms of marks. To help explain your answers and analysis, you should always attempt to use diagrams, mathematical demonstration where applicable and convey the economic intuitions behind the results. Do not forget to label your graphs. Key Marking criteria will include: • Initiative: Originality, innovativeness of answer • Assignment Structure: Clarity of aims, objective, structure and presentation • Quality of Writing: Readability and ability to convey…