If investment spending on net adds to the capital stock, we would expect that a-at first aggregate supply increases and later aggregate demand increases b-output would decline c-both aggregate demand and aggregate supply increase simultaneously d-at first aggregate demand increases and later aggregate supply increases

At an aggregate output level of $400 billion what is aggregate savings?

Consider an economy described as follows: Y = C+1+G Y= 8,000. G= 2,500. T 2,000. C- 1,000 + 2/3(Y-T). 1-1,200-100r. 'n this economy, compute private saving, public saving, and national saving. How much is the marginal propensity to consume? 1. 2. 3. Find the equilibrium interest rate.

Is the relationship between changes in spending and changes in real GDP in the multiplier effect a direction (positive) relationship or is it an inverse (negative) relation- ship?

3. Answer the following numerical questions about the IS-FX model.   a. The consumption function is C = 1.5 + 0.5(Y – T). What is the marginal propensity to consume? What is the marginal propensity to save?   b. The trade balance is TB = 5(1 – 1/E) – 0.2(Y – 8). What is the marginal propensity to consume foreign goods? What is the marginal propensity to consume home goods?   c. The investment function is I = 3 – 10i. What is investment when the interest rate i is equal to 5%?   d. Assume government spending is G. Add up the four components of demand and write down the expression for D.   e. Assume forex market equilibrium is given by I = (1/E – 1) + 0.15, where the two foreign return terms on the right are expected depreciation and the foreign interest rate. What is the foreign interest rate? What is the expected future exchange rate?

Consider a closed economy. The introduction of new technology and an increase in the precautionary saving motives in the private sector will decrease real interest rates and the equilibrium quantity of saving supplied and demanded in this economy.Answer true, false, or uncertain. Please briefly explain your answer.

How does a change in real interest rate affect investment spending?

Africa's government has increased its spending this year, leading to a growing budget deficit. How will this growing budget deficit affect the economy?  Your answer should discuss interest rates, private investment, and aggregate expenditure.

Suppose the U.S. has an investment opportunity which costs $200 which will increase output from 100 to 110 per quarter. The investment would take effect after t = 0. What is the marginal product of capital (MPK)? What is the difference in the present value of future income in the U.S. of undertaking the investment if the real world interest rate is 8%? Should the U.S. borrow from abroad to fund the investment and why?

1. Consider an economy described by the following data (in $ trillion): Č- 3.25; i- 1.3 ; G= 3.5: T-3.0; NX = -1.00; 7 = 1; mpc= 75; a= 0.3; 6=0.1 a. Drive a simplified expressions for the consumption function, the investment function, and the net export function. a. Drive the expression for the IS curve. b. If the real interest rate is r=2, what is the equilibrium output? If r= 5, what the equilibrium output? c. Draw the graph of the IS curve showing the answers from part (c) above. d. If government purchases increase to $4.2 trillion, what will happen to equilibrium output at r=27 What will happen to equilibrium output at r 5? Show the effect of the increase in government purchases in your graph from (d).