Consider a simple model, such as the one developed in this chapter. The table to the right shows the levels of desired consumption, desired investment, and desired aggregate expenditures for various levels of actual national income.

Consider a simple model, such as the one developed in this chapter. The table to the right shows the levels of desired consumption, desired investment, and desired aggregate expenditures for various levels of actual national income.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider a macroeconomy where the current population is 0.8 million people. Gross domestic private investment is constant $2000 million while consumer expenditure is described by the equation: C = 540+ 0.8DI. The government is fairly active, with a total expenditure of $3500 million and net taxes of $2550 million. Further investigation of the macroeconomy reveals that imports are constant at $3000 million while exports are constant at $2000 million. Currently, the overall price level (GDP deflator) is 118 and the potental GDP level is $13.5 billion. (Question 1 of 7) What is the current equilibrium level of real GDP? (report your answer at 2 decimal places and in millions of dollars)
The aggregate expenditures of the hypothetical country shown includes $2 billion in investment expenditures, $3 billion in government expenditures, and $1 billion in exports. At a real GDP of $18 billion, consumption expenditures less imports equal $12 billion and imports equal $2 billion. Use this information to graph the aggregate expenditures (AE) function. Assume autonomous consumption and autonomous imports are $0.
The total expenditure in Macroland begins with these initial levels (in trillions of dollars): autonomous consumption=1, Investment = 2; Net Exports = 0, T=2, and MPC = 0.75. Assume that equilibrium has been achieved. Suddenly there is an external shock and as a result investment goes down to 1. What is the change in GDP? Use the base model to answer this question. Equilibrium GDP goes down by 1 Equilibrium GDP goes up by 1 Equilibrium GDP goes up by 4 Equilibrium GDP goes down by 4
Suppose that a new free trade agreement allows the economy to import cheaper goods from overseas, thereby decreasing the general price level. Adjust the following graph by either shifting the consumption function curve or the initial point on the consumption function curve (A) to illustrate the impact of a fall in the price level.
Please answer everything in the photo including the graph.
Assume a consumption function that takes on the following algebraic form: C = 100 + 0.8 Y. Assume that Y= 1450 what is the level of consumption at this income level.
For the y axis, why is it labeled income and not consumption output
please try to solve it in 30 minute thanks
(1) Consumption function: C = 100 + .8Y (2) Planned investment: I = 38 (3) Government spending: G = 75 (4) Exports: EX = 25 (5) Imports: IM = .05 Y4 (6) Disposable income: Y = Y- T (7) Taxes: T= 40 (8) Planned aggregate expenditure: AE = C+I+ G+ EX– IM (9) Definition of equilibrium income: Y = AE
Consider a national income model as: Y= C + I0 + G Y= National Income C= (Planned) Consumption Expenditure I0= Investment G= Government Expenditure Consider Y= 20trillion, G= 4.2trillion, I0= 3.8 trillion. Explain the key elements missing from the National Income model. Add a new endogenous variable to represent that missing element or endogenize one of the exogenous variables to address this issue. C= a+ b(Y-T0) (a>0, 0<b<1) G= gY (0<g<1)
The private consumption of Macroland is given by C=500+0.75Y and the private investment function is given by I=400−1000r, where r is the interest rate and Y is the GDP. The planned aggregate expenditure can therefore be written as PE=C+I=900+0.75Y−1000r. The equilibrium in the goods and services market happens when the planned expenditure is equal to the actual expenditure, or PE=Y Find the equilibrium GDP by solving the system of equations PE=900+0.75Y-1000r PE= Y for Y and PE. Note your solutions will depend on r! 1. Plot your solution for Y in a diagram measuring Y on the horizontal axis and r on the vertical axis. This curve is called the IS curve.
Consider the basic Macroeconomic model involving: Private sector consumption: C = co+c1(Y-T); Y = GDP, T = Taxes Tax function: T = to+t1Y Business sector investment: I = io+i2r, r=interest rate Government spending: G = Go Exports: X = xo+x1x; x = Exchange rate of the dollar Imports: M = mo+m1Y+m2x; x = Exchange rate (a) Identify and explain the parameters: co, t1, i2, and m2. (b) Solve this model for the equilibrium GDP (Y*).