Consider an economy where the natural rate of unemployment rate is 5% and real GDP at full employment is $3.50 billion. Consumers' spending behavior is described by the equation: C = 150 +0.75DI, while firms investment behavior is described by the equation 1 = 300+ 0.2Y - 750r. Trade is allowed and currently imports are defined by the equation IM = 250+ 0.2Y. In 2016, exports is fixed at $300 million and government spending is fixed at $800 million. Furthermore, in the same year, tax rate is 20% and the interest rate is 8%. (Question 11 of 15) Consider that in 2017, the government decides to increase government spending to $1000 million. Also consider that the government decides to pay for the increased government spending by increasing interest rate to 10% at the same time. Assume that all other spending behaviors and rates remain the same. What is the equilibrium level of GDP (in millions of dollars) in 2017? (report your answer to 2 decimal places)

Consider an economy where the natural rate of unemployment rate is 5% and real GDP at full employment is $3.50 billion. Consumers' spending behavior is described by the equation: C = 150 +0.75DI, while firms investment behavior is described by the equation 1 = 300+ 0.2Y - 750r. Trade is allowed and currently imports are defined by the equation IM = 250+ 0.2Y. In 2016, exports is fixed at $300 million and government spending is fixed at $800 million. Furthermore, in the same year, tax rate is 20% and the interest rate is 8%. (Question 11 of 15) Consider that in 2017, the government decides to increase government spending to $1000 million. Also consider that the government decides to pay for the increased government spending by increasing interest rate to 10% at the same time. Assume that all other spending behaviors and rates remain the same. What is the equilibrium level of GDP (in millions of dollars) in 2017? (report your answer to 2 decimal places)

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 an economy where the natural rate of unemployment rate is 5% and real GDP at full employment is $3.50 billion. Consumers' spending behavior is described by the equation: C = 150+ 0.75DI, while firms investment behavior is described by the equation 1 = 300+ 0.2Y - 750r. Trade is allowed and currently imports are defined by the equation IM = 250+ 0.2Y. In 2016, exports is fixed at $300 million and government spending is fixed at $800 million. Furthermore, in the same year, tax rate is 20% and the interest rate is 8%. (Question 2 of 15) What is the trade balance (in millions of dollars) in 2016? (report your answer to 2 decimal places)
Consider an open economy with a current population of 0.55 million people, and where the potential GDP is $ 3.24 billion. Consumer expenditure is represented by the following equation: C = 60+ 0.75DI. Exports are constant at $500 million, and investors want to spend $ 400 million at every level of income. The government purchases are $300 million, imports are constant at $ 450 million, and taxes are $200 million. - What is the current equilibrium level of real GDP? (report your answer at 2 decimal places and in millions of dollars)
(4) The consumption function will shift parallel downwards. Q.1.9 Which of the following does NOT classify as a measure used by the government to protect domestic firms from foreign competition? (1) Tariffs; (2) Quotas; (3) Interest rates; (4) Exchange rate policy.
3. Why the aggregate demand curve slopes downward The following graph shows the aggregate demand (AD) curve in a hypothetical economy. At point A, the price level is 120, and the quantity of output demanded is $500 billion. Moving up along the aggregate demand curve from point A to point B, the price level rises to 140, and the quantity of output demanded falls to $300 billion. 170 180 150 B 140 130 A 120 110 AD 100 90 100 200 300 400 500 600 700 800 REAL GDP (Billions of dollars) PRICE LEVEL
Please no written by hand and no emage 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=40+0.5*(Y-T) Suppose G= 165 billion, I=50 billion, and T=10 billion. Given the consumption function and the fact that for a closed economy total expenditure can be calculated as Y=C+I+GY=C+I+G, the equilibrium output level is equal to _____ billion. Suppose the government purchases are increased by $100 billion. The new equilibrium level of output will be equal to _____ billion. 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 _____.
If consumption is C=100+0.75Yd Taxes is T=50+0.5Y Export is X=200 Import is M=50+0.25Y Government spending is G=150 Investment is I=200. Y is domestic income and Y is private disposable income. Determine the trade balance at equilibrium
Consider a small economy that is closed to trade, so that its net exports are zero. Suppose that the economy has the following consumption function, where C is consumption, Y is income (real GDP), IP is planned investment, G is government purchases, and T is taxes:C = $40 billion+0.5×(Y – T) Suppose G=$115 billion, IP=$50 billion, and T=$10 billion.Given the consumption function and the fact that, in a closed economy, planned expenditure can be calculated as Y=C+IP+G , the equilibrium income level is$ billion.Suppose that government purchases are increased by $100 billion. The new equilibrium level of income will be equal to$ billion.Based on the effect of the change in government purchases on equilibrium income, you can tell that this economy's multiplier is equal to_________?
Consider a macroeconomy where the current population is 800 thousand people. Gross domestic private investment is constant $2500 million while consumer expenditure is described by the equation: C = 580 +0.8DI. The government is fairly active, with a total expenditure of $2000 million andnet taxes of $2550 million. Further investigation of the macroeconomy reveals that imports are constant at $3000 million while exports are constant at $2500 million. Currently, the overall price level (GDP deflator) is 118 and the potental GDP level is $13.5 billion.(Question4 of 7)Now, consider that the government decreases taxes by 7.5%. While the change had a direct impact on the economy, other market conditions led to an unanticipated change in the economy. Specifically, imports decrease by 7.5%. At the same time, given the birth rate, mortality rate, and net migration, the economy experienced a 0% change in its population.1. As a result of these events, what is the current equilibrium level of GDP?…
Consider a macroeconomy where the current population is 800 thousand people. Gross domestic private investment is constant $2500 million while consumer expenditure is described by the equation: C = 580+ 0.8DI. The government is fairly active, with a total expenditure of $2000 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 $2500 million. Currently, the overall price level (GDP deflator) is 118 and the potental GDP level is $13.5 billion. (Question 7 of 7) Now, consider that the government decreases taxes by 7.5%. While the change had a direct impact on the economy, other market conditions led to an unanticipated change in the economy. Specifically, imports decrease by 7.5%. At the same time, given the birth rate, mortality rate, and net migration, the economy experienced a 0 % change in its population. As a result of these changes, what can be said about the macroeconomy?…
Consider a macroeconomy where the current population is 800 thousand people. Gross domestic private investment is constant $2500 million while consumer expenditure is described by the equation: C = 580+ 0.8DI. The government is fairly active, with a total expenditure of $2000 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 $2500 million. Currently, the overall price level (GDP deflator) is 118 and the potential GDP level is $13.5 billion. What is the current equilibrium level of real GDP? (report your answer at 2 decimal places and in millions of dollars) 1. What is the current equilibrium level of real GDP 2. what is the current real GDP per capita? 3. what is the value gap?
Suppose that we are in an economy with international trade, the government, domestic consumption, and investment. The government retains a tax rate of 10%. - Suppose that we observe this economy at two levels of national income (Y) ceteris paribus: (i) Y = 1,000 and (ii) Y = 1,800. The amounts for each of these desired expenditure categories at each of these levels of Y are given by: At Y = 1,000: + Consumption = 1,000 - Government Spending = 550 %3D Investment = 150 %3D Imports = 100 t Exports = 150 At Y = 1,800: 4 Consumption = 1,560 - Government Spending = 550 Investment = 270 e %3D Imports = 180 Exports = 150 Based upon this data, answer the following questions. We will keep referring to four categories - these are Consumption (C), Investment (1), Government Spending (G), and Net Exports (NX). « | 1. Plot both of the Desired Consumption and Desired Savings Functions, with Y on the x-axis and C & S on the y-axis. Label both functions' y-intercepts, and the x-intercept for the…
Prove the foreign investment multiplier is equal to 1 all over mpm + mps (1/mpm+mps)