Question 2 a. Derive the Euler equation for the the life cycle model when utility is CRRA. a. Assume p = r. What is C in each period?

See Figure 2.2 and examine the model.  Unlike other circular flow models, this model is missing another sector/s. what is the missing sector?

1

(1)The following macroeconomic model describes the economy of Sunderland. 1. Y= C +I + G + NX 2. C = 220 + 0.63 Y 3. 1 = 1000- 2000R 4. G = Go 5. NX = 525-0.10Y-50OR 6. M (0.1583Y-1000R)P (a)ls it a fair characterization to refer to equation #2 as a "simple" consumption function? Explain. (b)Derive the expression for equilibrium real output, Y, for this economy. Note: In your final expression for Y, restrict coefficient values to three decimal points. (c) Suppose government spending is 1200 , money supply by the Central Bank is 900 and the price level is 1, find the value of GDP (Y) and equilibrium interest rate (R) for Sunderland. Income Identity Consumption function Investment function Government Expenditure Net export function Money market equilibrium (2)The questions in this section are related to the macroeconomic model of Sunderland. (a)The expression you are asked to derive in question #1b can be considered an aggregate demand curve. Do you agree? Explain your answer. (b)Sketch…

Q12

The accompanying table shows the average annual wage for a country, in thousands of dollars, for selected years from 1970 and projected to 2040. a. Find an exponential function that models these data, with x equal to the number of years after 1970 and y equal to the average annual wage in thousands of dollars. b. Graph the model and the data on the same axes. c. What does the model predict that the average annual wage will be in 2030? Is this interpolation or extrapolation? d. When does the model predict that the average annual wage will reach $230,000? a. The equation of an exponential function that models the data is y=. (Use integers or decimals for any numbers in the expression. Round to three decimal places as needed.) b. Graph the model on the same axis as the data. Choose the correct graph below. All graphs are shown in a [0,70,10] by [0,250,50] viewing window. OA. OB. c. According to the model, the average annual wage in 2030 will be $ thousand. (Round to one decimal place as…

5. Choose the correct answer!