Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Chapter 29, Problem 8TY
To determine
Find the equilibrium GDP.
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(a) Suppose in a simple Keynesian economy, planned consumption function is given by C=250+0.65(Y-T). Planned investment, government purchases, taxes are $100 million, $100 million and $150 million respectively.
What is MPC, MPS and autonomous consumption
Derive the saving function.
What is the equilibrium level of income? Y= AD=C+I+G
If government purchases increase to $150 million, what is the new equilibrium level of income?
What level of government purchases is needed to achieve an income of $2000 million?
From question e) you get the newly government purchase. Now find out the multiplier value
What is the amount of shift in AD curve? [Use the multiplier value from e)]
(b) In a self-regulating economy “X”, labor supply is 40 million but labor demand is 10 million.
What will happen in goods and service market simultaneously? Explain this situation with relevant graph.
Based on your findings in a) is it denoting long run equilibrium? If not, will the economy be able to restore…
In February 2020, 15,300 people were employed, 2,700 were unemployed, and 7,000 people were not in the labor force.
During March 2020, 160 people lost their jobs and didn't look for new ones, 140 people quit their jobs and retired, 800 unemployed people were hired,
100 people stopped looking for jobs and quit the labor force, and 700 people entered the labor force to look for work.
a. Calculate for February 2020
i. The unemployment rate
ii. The employment-to-population ratio
b. Calculate for the end of March 2020
i. The number of people unemployed
ii. The number of people employed
iii. The unemployment rate
In the economy of Akron, the tax and savings functions are as follows:
T=220+0.2Y S = -140 +0.3Y
a) What is the equation for the consumption function? Remember to enter a minus (-) sign to indicate negative values.
C=(Clickselect)
Y
b) If Y=1100, complete the following table:
Y
1100
YD
Chapter 29 Solutions
Economics: Principles & Policy
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