Question

In: Economics

: Consider a simple economy with only two sectors with consumption and government. Show how a...

: Consider a simple economy with only two sectors with consumption and government. Show how a balanced budget results. Explain your working and answer in words

Solutions

Expert Solution


Related Solutions

Consider an economy with two sectors: agriculture and production of computers. There are two factors used...
Consider an economy with two sectors: agriculture and production of computers. There are two factors used in the production of both industries: labor, mobile between the industries, land specific to agricultural production and capital specific to the production of computers. This economy is involved in international trade and workers spend most of their earnings on computers. Now assume that the world price of agricultural products increases and the price of computers does not change, then A.Both nominal and real wages...
Consider an economy with two sectors: agriculture and production of fidget spinners. There are two factors...
Consider an economy with two sectors: agriculture and production of fidget spinners. There are two factors used in the production of both industries: labor, mobile between the industries, land specific to agricultural production and capital specific to the production of fidget spinners. This economy is involved international trade andworkers spend most of their earnings on agricultural products. Now assume that the world price of agricultural products decreases and price of fidget spinners does not change, then A. Nominal wage of...
consider a simple economy that produces only two products: A, B.    GOOD A GOOD B Price...
consider a simple economy that produces only two products: A, B.    GOOD A GOOD B Price Quantity Price Quantity 2015 20 500 30 500 2016 50 1000 40 500 2017 50 1000 50 1000 Compute nominal GDP, real GDP, and the GDP deflator for each year, using 2018 as the base year.
Consider a two-period, small, open, endowment economy without investment and government expenditures, but with durable consumption...
Consider a two-period, small, open, endowment economy without investment and government expenditures, but with durable consumption goods. Purchases of durable consumption goods in period 1, denoted C1, continue to provide utility in period 2. The utility of households in period 2 depends on purchases of durable consumption goods in period 2 , denoted C2, and on the un-depreciated stock of durables purchased in period 1. Durable consumption goods are assumed to depreciate at the rate δ ∈ [0, 1]. Household...
Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services...
Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services are described by these equations: L m = 320 − 8 Wm ,L s = 150 − 4 W s where L is labor (in number of workers), W is the wage (in dollars), and the subscripts denote the sectors. The economy has 248 workers who are willing and able to work in either sector. If a minimum wage of $25 is imposed in...
Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services...
Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services are described by these equations: ??=1321–20?? ??=1204–22?? where L is labor (in number of workers), W is the wage (in pesos), and the subscripts denote the sector. The economy has 500 workers who are willing and able to work in either sector. Since the number of workers employed cannot be fractions and must be whole numbers, round answers for the values of employment to...
Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services...
Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services are described by these equations: Lm = 400 – 12Wm Ls = 200 – 8Ws where L is labor (in number of workers), W is wage (in dollars), and the scripts denote the sectors. The economy has 200 workers who are willing and able to work in either sector. If workers are free to move between sectors, what relationship will there be between Wm...
Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services...
Consider an economy with two sectors: manufacturing and services. Demand for labor in manufacturing and services are described by these equations: Lm=200-6Wm Ls=100-4Ws where L is labor (in number of workers), W is the wage (in dollars), and the subscripts denote the sectors. The economy has 100 workers who are willing and able to work in either sector. If workers are free to move between sectors, what relationship will there be between Wm and Ws? Suppose that the condition in...
Consider a simple financial market for a closed economy with government, such as might be crudely...
Consider a simple financial market for a closed economy with government, such as might be crudely representative of the world as a whole. a) Construct a diagram to represent this market and note and explain your choice of the variables on the vertical and horizontal axes. b) Draw the saving supply curve and the investment demand curve, indicating and explaining which variables shift them to the right and left and why. c) Imagine that this market faces simultaneous pessimism shocks....
1. Consider an economy with no international trade, no government spending and no taxes, whose consumption...
1. Consider an economy with no international trade, no government spending and no taxes, whose consumption function and investment function are given by the following equations: C = 100,000 + .92Y I = 40,000 a. What is the equilibrium level of aggregate output for this economy? b. What is the saving function for this economy? c. Check the solution, as we did in class, by showing that at the equilibrium level of Y total spending exactly matches the level of...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT