Graphically illustrate and explain the effects of an increase in
the saving rate on the Solow growth model. In your answer, you must
clearly label all curves and the initial and final equilibria. In
your answer, explain what happens to the rate of growth of output
per worker and the rate of growth of output as the economy adjusts
to this increase in the saving rate.
For each situation, indicate the effects on consumption and
saving in the economy:
The federal government increases payroll taxes.
The Federal Reserve reduces key interest rate targets.
Consumers are fearful of a possible recession.
There is an increase in rent and mortgage payments for
housing.
NO HAND-WRITE PLEASE
The saving schedule shows the relationship of saving of
households to the level of
consumption.
investment.
disposable income.
the average propensity to save.
Dissaving occurs when
income is greater than saving.
income is less than consumption.
saving is greater than consumption.
saving is greater than the interest rate.
Two basic determinants of investment spending are
consumer spending and government spending.
expected returns and real interest rates.
general price level and the level of output.
domestic trade and international trade.
Given...
Show graphically and explain how an increase in the technology
that augments the fixed factor of production of perfectly
competitive firms affects the price, output and profits of a
representative firm in both the short-run and in the long-run.
Show graphically and explain how an increase in the technology
that augments the fixed factor of production of perfectly
competitive firms affects the price, output and profits of a
representative firm in both the short-run and in the long-run.
Consider the effects of an exogenous increase in the domestic
price level. For each of the assets listed, explain how the change
in the price level would affect the wealth of the asset holder.
Then explain the effect on aggregate (private sector) wealth and
the effect on the aggregate expenditure (AE) curve.
8.1 Cash holdings
8.2 A household mortgage
8.3 A government bond that promises to pay the
holder $10,000 on January 1, 2025