Consider an economy described by the following: The expression for the MP curve is: OA. r=3+0.5m. OB. r 3 + 0.75. c. r=1+0.5m. OD. r=1+0.75. The expression for the AD curve is: OA. Y=13-1.3. B. Y=13-1z. OC. Y 10-1.3. OD. Y=10-12. Assume that = 1. The real interest rate is%. (Round your response to two decimal places.) C = $3 trillion 7 = $1.3 trillion G= $3 trillion 7 = $3 trillion NX S-1 trillion mpc = 0.75 d = 0.3 X = 0.2 λ = 0.5 r = 1
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- Consider an economy described by the following: a. Derive expressions for the MP curve and the AD curve. The expression for the MP curve is: OA. 7=1.5+0.8. OB. 7=3+0.8 C. r= 1.5+ 1x OD. 7=3+1x. The expression for the AD curve is: O A. Y=14-1.3. OB. Y 17.5-1.3. OC. Y=14-2x. O D. Y=17.5-2. = $3 trillion 7 = $1.3 trillion G = $3.5 trillion T = $3 trillion In order to keep output constant, the Bank will have to NX = S-1 trillion 7 = 1 b. Assume that =2. The real interest rate is %. (Round your response to two decimal places.) The equilibrium level of output is $trillion. (Round your response to two decimal places.) c. Suppose government spending increases to $4 trillion. What happens to equilibrium output? Equilibrium output will to S trillion. (Round your response to two decimal places.) d. If the Bank of Canada wants to keep output constant, then what monetary policy change should it make? mpc = 0.8 d = 0.3 x = 0.1 λ = 1 7 = 1.5 the real interest rate to r= %. (Round your response to two…09. Consider the following model. Expenditure is given by: E=C+I+G The consumption function is specified as: C=c₁+cY We assume a closed macroeconomic system so that: Y=E Which is the correct representation of income as a function of autonomous expenditures and the marginal propensity to consume? a. b. C. Y= d. Y= Co+I+G 1-c I+G 1-c-c Y= (I+G). Y=I. 1-c 1Ts assume that in the model of national economy household consumption is C = 300 + 0.9*DI, companies' gross vestment is Ig = 200, but government expenses are G = 250, while the sum of taxes collected by the government iS -150. Taking into account that disposable income DI =Y-T, calculate: a) Equilibrium level of income Y; b) Calculate the value of Marginal propensity to consume and value of Marginal propensity to save; c) Private consumption at macroeconomic equilibrium%3; d) Develop equation of saving and calculate amount of saving at the point of equilibrium level of income.
- Consider the planned aggregate expenditure diagram in the figure below. Planned Aggregate Expenditure (PAE, billions of $) PAE = Y 500 450 PAE 400 350 300 250 200 150 100 50 50 100 150 200 250 300 350 400 450 500 Actual Aggregate Expenditure (Y, billions of $) Instructions: Enter whole numbers into each box. a. What is the equilibrium level of output in this economy? |billion b. At an output level of $200 billion, planned aggregate expenditure is equal to $| likely to (Click to select) ♥ output in the upcoming year. billion and the economy is c. At an output level of $400 billion, planned aggregate expenditure is equal to $ likely to (Click to select) ♥ output in the upcoming year. |billion and the economy is (Click to select) increase decrease not changeWhich of the following is true concerning the relationship between the business cycle and aggregate investment spending? O When the economy is in recession, unemployment rises and income falls. Firms will be less likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has fallen. O When the economy is in recession, unemployment rises and income falls. Firms will be more likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has risen. O When the economy is in recession, unemployment falls and income rises. Firms will be more likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has risen. O When the economy is in recession, unemployment falls and income rises. Firms will be less likely to purchase new equipment and expand their productive capacity because planned aggregate expenditure has fallen.Answer the next question based on the following diagram. The marginal propensity to consume in the diagram below is: Answer the next four questions based on the following diagram. C+I+G 200 875 0.955 O.765 0675 1600 -C=Y -C -NI/GDP
- 16. Consider a closed economy with demand for goods as follows: yd = C +I+ G C = 200 + 0.80(Y – T) I = 600 G = 1000 T = 1000 a. What is "autonomous expenditure" for this economy? b. Graph this economy's (planned) aggregate expenditure function. Be sure to give the coordinates of at least 2 distinct points in your graph. c. According to the Keynesian Cross model of income determination, what would be the short run equilibrium value of real aggregate income (Y) for this economy? d. If government purchases (G) were to increase to 1,200, what would the new short run equilibrium value of income be? etv MacBook Air 80 888 DII F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 # $ % & ) + 3 4 6 7 8 9 %3D de E Y U P { } [ D F G H J K L + I| ....Consider the following planned aggregate expenditure function: AEp=1000+0.8Y 1. Calculate the income-expenditure equilibrim real GDP, Y*, for this economy. Illustrate the equilibrium real GDP on a diagram below. Label the equilibrium point E. 2. Explain how an increase in uncertainty due to the collapse of multiple banks in the economy affects consumption and firm investment spending. Also explain what effect these changes would have on AEp and Y*. Show the effect on your diagram in part 1. 3. Suppose following the events above consumption and investment spending change by 220. By how much would Y* change eventually? Calculate and explain. 4. If the federal government wants to get the economy back at producing Y* you found in part 1 by adjusting its purchases of goods and services (G) by how much would it have to change G? (Hint: use the multiplier to calculate).An economy is described by the following equations: C = 1,800+ 0.6 (Y - T) IP = 900 G = 1,500 NX = 100 PAE= T = 1,500 y* = 9,000 a. Find a numerical equation linking planned aggregate expenditure to output. Instructions: Round the value for mpc to one decimal place. Y b. Find autonomous expenditure and induced expenditure in this economy. Instructions: Round the value for mpc to one decimal place. Autonomous expenditure: Induced expenditure:
- The figure below shows a simple macroeconomic consumption model. The letters N and D indicate curves, the letters T, A, L and Q denote (intersection) points. The "auxiliary triangles" marked in burgundy mean that if the value of the horizontal section shown in them is considered to be 1, the value of the vertical sections is s and r, respectively. It is known that L is 100 and ris 0.75. T 45° A 1 Give the equation of the savings function: S= (use a decimal point and 2 decimals if needed, and write capital letters as an unknown variable) How much is the value of A on the X axis?THE AGGREGATE EXPENDITURE MODEL (IN THE SHORT RUN)YOU MUST SHOW YOUR CALCULATIONS IN THE SPACE BELOWFOR THE NEXT PROBLEM USE THE FOLLOWING FORMULA:CHANGE IN GDP = [ 1 / (1-MPC) ] * CHANGE IN GInitially, the economy is producing $13 trillion in goods and services and the government is spending $2 trillion.Then the government decides to increase its spending to $2.7 trillion. Compute the new equilibrium level of output. Assume that the marginal propensity to consume is 0.7 (MPC=0.7).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.