**Planned Expenditure Function with Lump-Sum Tax****Do all parts to the question (show your work):**Assume in Fantasticland, MPC = 0.75, and autonomous consumption = $6000.Planned investment = $2000, and planned government purchases = $5000. All Planned I and G are autonomous expenditures. Taxes (T) = $1000, and net exports = zero.a. Write out the consumption function.b. What is induced consumption in this model?c. Write out the planned expenditure function (show your work).d. Calculate current equilibrium real current GDP (income) (show your work).e. How much is the expenditure multiplier?f. How much is the net tax multiplier?g. At the current level of equilibrium, the economy is experiencing a recessionary gap $4000. How much is the full employment GDP?h. How much will Fantasticland change lump-sum tax to close the recessionary gap?i. Write out the new planned expenditure function to reflect the change in lump sum taxes to close the recessionary gap of $4000.j. Graph the planned expenditure function. Show current equilibrium point, full employment Y, shift in planned expenditure for a change in lump-sum taxes. Label the autonomous points.

Given MPC= 0.75 Autonomous consumption C0=$6000 Planned investment I= $2000 Planned government purchases G = $5000 Taxes T = $1000 Net export NX=0 Keynesian consumption function is equal to the autonomous consumption plus induced consumption C=C0+MPC×Yd Yd is the disposable income Yd= Y-T Putting values C=6000+0.75Y-T ........... (1) Equation 1 represent the equation of consumption function From equation 1 C=6000+0.75Y-T Where 6000 is the autonomous consumption and 0.75(Y-T) is the induced consumption. Planned expenditure function is PE = C+I+G+NC Putting values PE=6000+0.75Y-T+2000+5000+0PE=13000+0.75Y-1000PE=13000-750+0.75YPE=12250+0.75Y ............ (2) Equation 2 represents the equation of planned expenditure when tax is equal to $1000 "Since you have posted multiple subpart question so as per guidelines, we are bounded to solve only 3 subpart. Thank you".

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Planned expenditure function question with lump-sum tax Do all parts to the question (show your work) Assume in Fantasticland, MPC = 0.75, and autonomous consumption = $6000. %3D Planned investment = $2000, and planned government purchases = $5000. All Planned I and G are autonomous expenditures. Taxes ( T) is = $1000, and net exports = zero. %3D а. Write out the consumption function b. What is induced consumption in this model С. Write out the planned expenditure function (show your work)

Planned expenditure function question with lump-sum tax Do all parts to the question (show your work) Assume in Fantasticland, MPC = 0.75, and autonomous consumption = $6000. %3D Planned investment = $2000, and planned government purchases = $5000. All Planned I and G are autonomous expenditures. Taxes ( T) is = $1000, and net exports = zero. %3D а. Write out the consumption function b. What is induced consumption in this model С. Write out the planned expenditure function (show your work)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Given a consumption function, C = co + cY, specified such that the marginal propensity to consume is 75%, how much will C increase by if Y increases by £3bn? a. £0.75bnb. £2,250mc. £2bn d. £1,500m
Please answer completely
Given, autonomous consumption Co = a = 4.0, marginal propensity to consume MPC = 0.80, investment | = 8.5, government expenditure G = 9.0, exports X = 1.5, imports M = 0.75, and taxes T = 0 ($, billion): i. What is the level of consumption and saving if income is 10.0? ii. What is the equilibrium output level YE (assume this is real GDP) for the economy?
Given a consumption function, C = c0 + cY, specified such that the marginal propensity to consume is 75%, how much will C increase by if Y increases by £3bn? a. £0.75bnb. £2,250mc. £2bn d. £1,500m
According to ihe Bureau of Ecnnomic Analysis, during the recession of 2007–2009, household saving as a fraction of disposable personal income increased from a low of just over I percent in ihe first quarter of 2008 to 5 percent in the second quarter of 2009. All else equal, what impact would this change in saving have on the MPC, MPS, and multiplier? How would ihis change affect equilibrium output when planned investment changes?
Consider two economies, A and B. Economy A has a marginal propensity to consume of 0.9, a net tax rate of 0.2 and a marginal propensity to import of 0.2. Economy B has a marginal propensity to consume of 0.7, a net tax rate of 0.2 and a marginal propensity to import of 0.2. Suppose there is an increase in autonomous investment of $5 billion in each of these economies. Which of the following statements is true? Select one: O A. The AD curve shifts farther to the right in Economy A than Economy B. O B. The AD curve shifts to the left the same amount in both economies. O C. The simple multiplier is larger in Economy A. O D. The AD curve shifts to the right the same amount in both economies. O E. The AD curve shifts farther to the left in Economy B than Economy A.
f and J
If Andrea’s disposable income increases from $600 to $700 and her level of personal consumption expenditures increases from $450 to $475. You may conclude that her marginal propensity to consume is: Group of answer choices 0.5 0.1 0.75 0.25
No written by hand solution
Which one of the following statements relating to marginal propensity to consume is INCORRECT? (a) Marginal propensity to consume for a given consumption function is usually less than 1; (b) If the people in a country save 30c out of every rand they earn, the marginal propensity to consume in this country is said to be 0.7; (c) If the marginal propensity to consume is given as 0.622, then the value of the simple multiplier will be 2.5; (d) The larger the value of the marginal propensity to consume, the steeper the consumption function will be.
Assume that specific functional forms are assumed for the consumption function and the investment demand function: C = c1(Y; – G;) + c2(Y;+1- G++1) – C3ri I = -dır: + d2At+1+ d3Kt Where c1, C2, c3, di, dzand d3are fixed parameters governing the sensitivity of consumption and investment to different relevant decision factors. a) Find an algebraic expression of the IS (Investment-Savings) curve. b) Use the above expression to find the slope of the IS curve. C) Assume that the parameter values are: C1 = 0.6, c2 = 0.5, c3 = 10, dı = 20, d2 = 1 and d3 = 0.5. Assume that Yt+1 = 15, Gt = 10, Gt+1 = 10, At+1 = 5 and Kt = 15. Assume that rt = 0.1. Find the product in the current period. d) Now suppose ri = 0.15. Find the product Y in the current period. (e) Create a range of values of r, between 0.01 to 0.2, with 0.001 intervals between values. Find Y for each r:using an Excel sheet and draw the IS curve. Does it have the expected slope? Comment f) Find another version of the IS curve with A…