MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Question
Chapter 9.A, Problem 2DQ
To determine
To describe: The effect to multiplier analysis when b = 0 and b = 1.
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- What is constrains optimization, explain and discuss the significance of langrage multiplier.arrow_forwardAssume: Y= C + I + G + NX C = 400 + (0.8)YD Io = 200 G = 300 + (0.1)(Y* - Y) YD = Y - TA + TR NXo = - 40 TA = (0.25)Y TRo = 50 How do I calculate the multiplier? Thank you.arrow_forwardAn economy is described by the following equations: Y = C + I, + G C = a + b(Y – T) T = tY %3D %3D Let a = 20,6 = 0.75, t = 0.25, I, = 100, G = 240 %3D (a) Determine the value of the multiplier for this economy, and find the equilibrium value of Y. (b) Find the values of C, T and G-T, given your answer to part (a). (c) Describe what would happen if the government tried to eliminate its budget deficit by undertaking a cut in G equal to the current value of G-T. HTML Editor B IUA A ▼ 回 深 D ¶ T 12pt Paragrap IIarrow_forward
- Required information Skip to question The basis of the parameters for an economy shown in Table 6.5. (All figures are in $billion.) Table 6.5 G = 1200 I = 400 C = 100 + 0.6Y XN = 700 - 0.2Y Refer to Table 6.5 to answer this question. What is the value of the multiplier in this economy? Multiple Choice 1. 1.54. 1.67. 2. 5.arrow_forwardWhat is the minimum value of multiplier?arrow_forwardAnswer the following questions and provide the necessary solutions. 1. Compute the multiplier if a) mpc = 0.95 b) mpc = 0.85 C) mpc = 0.6arrow_forward
- If the consumption function is given by C=20+3/4 Y then the value of multiplier will be???arrow_forwardThere might be many factors (economic and non-economic) that affect the size of the multiplier. What are some that you think could influence its size? Which ones do you think would make it larger, and which are more likely to make it smaller?arrow_forwardCalculate the value of MPC if the multiplier is given to be as 1.4arrow_forward
- A different economy can be modeled with these equations: C = 150 + b Yd, I = 260, G = 70, X = 280, M = 325, and T = 60. If the multiplier on Investment is 6.25, what is the value of b?arrow_forwardAssume an economy can be modeled with these equations: C = 210 + b Yd, I = 200, G = 103 - 0.054 Y, X = 280 M = 305 and T = -40 + 0.29Y. What is the value of b when the multiplier on Investment is 1.867? the answer is 0.73arrow_forward6) Suppose the economy is closed and is characterized by the following behavioral equations: C=C₁+C₁YD Y₁ = Y-T I=b₁ + b₂Y a. Government spending and taxes are constant. Solve for the equilibrium output. What is the value of the multiplier? How does the relationship between investment and output affect the value of the multiplier as compared to the case when investment was exogenous? For the multiplier to be positive what condition must (c₁ +b₁ ) satisfy? Explain your answers? b. Suppose that the parameter bo, sometimes called business confidence, increases. How will the equilibrium output be affected? Will investment change by more or less than the change in bo? Why? What will happen to national saving?arrow_forward
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