If the marginal prospensity to consume is 0.75, an increase in autonomous investment of 800.00 will result in a a) 3200 increase in the level of autonomous consumption b) 3200 increase in the equilibrium level of income c) 1500 increase in the equilibrium level of income d) 1300 increase in the level of induced consumption

1. Consider the following static model. The consumer has preferences such that he always sets his consumption equal to è, where è is exogenously fixed. The consumer has h units of time that he can allocate between working hours (NS) and leisure (1). The wage per hour is w. The representative firm has a technology for producing consumption goods, given by y=zNd where z is the total factor productivity and Nd is the labor input. Denote the profit of the firm as 7. The firm belongs to the representative consumer. The government imposes proportional tax 7 (set exogenously) on the labor income of the representative consumer. The government spends the tax revenue to give lump-sum subsidy B to the representative consumer. 1). Write down the consumer's budget constraint. 2). Solve consumer's optimization problem. 3). Write down the firm's optimization problem and find î and w. 4). Write down market clearing condition for the labor market and for the goods market. 5). Write down the government…

Consider a household with the following utility function representing their preferences over consumption: U = u(Ct) + Bu(C++1) with =- u(C) = exp(-aC), BE (0,1), a > 0 where C and C++1 represent consumption in the current and future periods, respectively. The household faces a two-period decision problem. They receive endowments of Y, and Yt+1 in the current and future periods, respectively. The real interest rate is denoted by rt. Notice: The utility function u(C) takes on negative values for all positive consumption levels. However, in economic models, the absolute value of utility is less important than how utility changes with consumption. A higher level of utility represents a more preferred outcome for the household. Question: Formulate the household's budget constraints for the current and future periods. Com- bine them to derive the household's intertemporal budget constraint. Write down the household's optimization problem (objective function) that they seek to maximize.…

Suppose that firm uses 3 units of labor (L) with 4 units of capital (K) in fixed proportion. Which of the following is correct? The law of diminishing MRTSLK holds and thus Lagrange multiplier method is applicable MRTSL,K is not well defined and thus Lagrange multiplier method is applicable The law of diminishing MRTSLK holds and capital and labor are perfect complements. O MRTSLK is not well defined and thus Lagrange multiplier method is not applicable

sub= 24 help

Consider the model where an individual has wealth k which they can either save or consume. If they save it, they receive a fixed and exogenous return r. The instantaneous utility function is given by: u(c, k) = c + a(k) where c is consumption, k is wealth, and a(k) is a function that defines the utility that an individual gets from holding wealth. The growth in wealth is given as the returns on wealth rk, plus income from working z(t), minus consumption c(t). a. Write out the differential equation for wealth. b. For an infinite time model, set up the optimal control problem with discounting at a rate 8. c. Write the current-valued Hamiltonian of this problem. d. Derive the steady-state level of consumption.

Solve for first order conditions of the representative agent. Write down the market clearing condition (resource constraint) for the aggregate economy.

U = c¹/² + Bc¹²/2 tt+1 A) Suppose that the household faces two within period budget constraints of the form: C++ 1 = Y++1 + (1+r)s Combine the two period budget constraints into one intertemporal budget constraint. B) Use the intertemporal budget constraint and this utility function to derive the Euler equation characterizing an optimal consumption plan. C) Use this Euler equation and the intertemporal budget constraint to derive a consumption function expressing cas a function of Y, Y₁+1, and rt.

Assume that Kelly is a life cycle consumer and receives incomes of 20, 30, 45 and 0 in her four period life. What is Kelly's marginal propensity to consume out of her new wealth (AC/AW) in the following situations: [Hint: Let AC be the the change in consumption compared to what she would have done before the inheritance changed her wealth AW]. 19. In period 2 following an unexpected inheritance of 10: (a) 0.25; (b) 0.33; (c) 0.75; (d) 1.0; 20. In period 3 following an expected lump sum payment from her trust fund of 15: (a) 0.33; (b) 0.75; (c) 0.45; (d) 0.50; 21. What is her desired optimal consumption in period 3 with the anticipated trust fund gift of 15: (a) 20; (b) 30; (c) 27.50; (d) 22.50; 22. In what period of her working life (Y > 0) would her marginal propensity to consume out of an unexpected inheritance of 10 be the highest: (a) 1; (b) 2; (c) 3; (d) 4;

Consider an economy with two goods, consumption c and leisure l, and a representative consumer. The consumer is endowed with 24 hours of time in a day. A consumer's daily leisure hours are equal to l = 24 – h where h is the number of hours a day the consumer chooses to work. The price of consumption p is equal to 1 and the consumer's hourly wage is w. The consumer faces an ad valorem tax on their earnings of T percent. The consumer also receives some exogenous income Y that does not depend on how many hours she works (e.g. an inheritance). The consumer's preferences over consumption and It hours of work can be represented by the utility function U(c, h) = c- (a) What is this consumer's budget constraint? (b) Solve for the consumer's utility maximizing hours of work h*(w, 1 - T, Y) and con- sumption c*(w, 1 - T, Y). (c) Repeat part (b) for a consumer with the utility function U(c, h) = alog(c) - Blog(h).