(Life-Cycle Hypothesis) According to the life-cycle hypothesis, what is the typical pattern of saving and spending for an individual over his or her lifetime? What impact does this pattern have on the saving rate in the overall economy?

(Life-Cycle Hypothesis) According to the life-cycle hypothesis, what is the typical pattern of saving and spending for an individual over his or her lifetime? What impact does this pattern have on the saving rate in the overall economy?

(Micro Versus Macro) Some economists believe that to really understand macroeconomics, you must fully understand microeconomics. How does microeconomics relate to macroeconomics?

1. (MPC and MPS) If consumption increases by $12 billion when real disposable income increases by $15 billion, what is the value of the MPC? What is the relationship between the MPC and the MPS? If the MPC increases, what must happen to the MPS? How is the MPC related to the consumption function? How is the MPS related to the saving function?2. (Government Spending) How do changes in disposable income affect government purchases and the government purchase function? How do changes in net taxes affect the consumption function?3. (Net Exports) What factors are assumed constant along the net export function? What would be the impact on net exports of a change in real disposable income?4. Expectations and consumer confidence are important in determining fluctuations in aggregate spending. In your opinion, what is the present status of consumer confidence? Do you think consumers are pessimistic or optimistic? Briefly discuss.5. (Consumption Function) How would an increase in each of the…

Suppose that the market demand curve for your product is given by: Q=$25-0.5P. Assume that the marginal cost and average total cost equal $34 for all levels of production. The marginal revenue curve would be given by the equation: MR= (Carefully enter your response as an algebraic expression, using the proper notation in the proper format.) The adjacent figure shows the demand curve (D) and the marginal revenue curve (MR) for your product. Using the line drawing tool, plot the marginal cost (MC) and the average total cost (ATC) curves. Using the point drawing tool, show the profit-maximizing price and quantity for your firm. Carefully follow the instructions above and only draw the required objects. Economic profit earned by your firm will be equal to $. Price (dollars/unit) $60 $50- $40- $30- $20- $10- $0- 0 MR 12 Quantity (units) 16 D 20

7. (GDP Demanded) How is the aggregate expenditure line used to identify real GDP demanded assuming a given price level?

6. Tax systems and saving This question addresses the impact of saving on an economy by examining what happens if tax laws change to induce saving and how changes in tax laws can discourage saving. The following graph shows the market for loanable funds. Show the impact of a change in the tax law that successfully encourages saving by shifting either the demand curve (D), the supply curve (S), or both. INTEREST RATE LOANABLE FUNDS S 6.4. (?)