The partial data in the table below are for the economy of Arinaka. Planned investment, government...

The partial data in the table below are for the economy of Arinaka. Planned investment, government spending, and all taxes are autonomous. You may assume that the MPC, MPS, and MPM are constant.

a. Fill in the blanks in table below.

Y	T	Y_D	C	S	I	G	X_N	AE	Unplanned Investment
$400	$40		$320	$40	$60	$50	$10
450				45			–5
500
550

b. The value of equilibrium income is $ .

c. If planned investment decreases by $10, the new value of equilibrium income is $ .

Expert Solution

a) From the given table, we see that when income (Y) increases from 400 to 450 saving increases from 40 to 45. Hence,

MPS = Change in savings / Change in income = 5 / 50 = 10% or 0.10

MPC = 100% - 10% = 90% or 0.90

Since net export (XN) decreases decreases by 5, hence

MPM = (Change in import / Change in income) = (-5 - 10) / 50 = -15 / 50 = 30% or 0.3.

b) The value of equilibrium income is $500.

c) If planned investment decreases by $10,

If planned investment decreases by $10, the new value of equilibrium income = (450 + 550) / 2 or (460 + 490) / 2 = $475.

Rahul Sunny answered 2 years ago

The data in the table below are for the economy of Nubia. a. Complete the AE...

The data in the table below are for the economy of Nubia. a. Complete the AE column. Y T YD C S I G X IM XN AE 0 80 −80 20 −100 40 105 170 60 110 300 95 205 260 −55 40 105 170 75 95 600 110 490 500 −10 40 105 170 90 80 900 125 775 740 35 40 105 170 105 65 1,200 140 1,060 980 80 40 105 170 120 50 b. Write...

Problem 4 Consider the following economy: Consumption Expenditure 446,832 million Planned Investment Expenditure 346,877 million Government...

Problem 4 Consider the following economy: Consumption Expenditure 446,832 million Planned Investment Expenditure 346,877 million Government Expenditure 446,832 million Exports 402,443 million Imports 388,374 million Marginal Propensity to Save 0.3 Marginal Tax Rate 0.32 Autonomous Taxes 301,240 million Marginal Propensity to Import (nx) 0.04 (e) Calculate the marginal leakage rate. (0.5 mark) (f) Assume that the natural rate of output for this economy is estimated as $1,200,000 million. (i) Is this economy facing a recessionary or inflationary gap? (0.5 mark) (ii) Illustrate...

Use the macroeconomic data in the table below for the US economy for 2017 and 2018...

Use the macroeconomic data in the table below for the US economy for 2017 and 2018 to answer the questions followed. Year NGDP in ‘000” RGDP In ‘000’ In 2009 prices RGDP Growth Rate % GDPD Inflation Rate % u-Rate % CPI Inflation Rate % 2017 2018* 19,390.6 17,096.2 - ? - 4.4 245.12 - 19,956.8 17,379.7 ? ? ? 3.9 250.5 ? * Estimated data from 2017 data, but very close. Sources: www.bea.gov and www.bls.gov 5a. Estimate the values...

Consider the Keynesian Model for the Open Economy with Government: Planned Expenditures: AE = C +...

Consider the Keynesian Model for the Open Economy with Government: Planned Expenditures: AE = C + I + G + X - IM Consumption: C = 435 + 0.72 (Y- T) Net Tax Revenue: T = 130 + 0.26 Y Gross Investment: I = 675 Government Expenditures: G = 540 Exports: X = 545 Imports: IM = 110 + 0.12 Y Potential Output: Yp = 3,550.742 Section 1: Model Questions Part 1. What is the slope of the AE curve? ...

Table 2: All figures in Billions of Dollars Aggregate Output/Income Aggregate Consumption C=100+.9Yd Planned Investment Government...

Table 2: All figures in Billions of Dollars Aggregate Output/Income Aggregate Consumption C=100+.9Yd Planned Investment Government Purchases Net Taxes Aggregate Expenditure Unplanned Inventory Change 2,400 2,170 130 200 100 2,800 2,530 130 200 100 3,000 2,710 130 200 100 3,200 2,890 130 200 100 3,400 3,070 130 200 100 3,600 3,250 130 200 100 3,800 3,300 130 200 100 a. Complete the table by determining the aggregate expenditure and the unplanned inventory change at all income levels b. Determine the marginal propensity...

Centrally planned economy and a market economy

Distinguish between a centrally planned economy and a market economy.

Consider a government that wants to raise investment spending in the economy. Perhaps the government is...

Consider a government that wants to raise investment spending in the economy. Perhaps the government is concerned about future economic growth and so wants to promote investment in order to raise growth. However, the government also does not want to increase inflation. Inflation could be caused by excessively high output growth pushing up prices. Therefore, the government does not want output to increase more than normal. Use the following questions to think about how the government could raise investment without...

Cosider the financial data for a project given in that table below: Initial investment $110,000 Project...

Cosider the financial data for a project given in that table below: Initial investment $110,000 Project life 6 years Salvage value $10,000 Annual revenue $25,000 Annual expenses $5,000 A) What is i* for the project? B) If the annual expense increases at a 6?% rate over the previous? year's expenses, but the annual income is? unchanged, what is the new i*??

The table below shows price and quantity data for a hypothetical economy. Quantity Demanded 2018 Prices...

The table below shows price and quantity data for a hypothetical economy. Quantity Demanded 2018 Prices 2017 (base year) Prices 2018 (current year) 10 kilograms (kg) coffee $6/kg $2/kg 10kg tea $4/kg $4/kg Assume that a typical consumer’s food basket contains only coffee and tea. Moreover, assume that consumers are completely indifferent between coffee and tea. If the official “food inflation rate” for 2018 is calculated using a Paasche index, the substitution bias is demonstrated by the fact that the...

1. Since government spending and planned investment are both fixed variables, what must be true of...

1. Since government spending and planned investment are both fixed variables, what must be true of the aggregate expenditure function? O A. The aggregate expenditure function is horizontal. O B. The aggregate expenditure function is below and parallel to the consumption function. O C. The aggregate expenditure function is above and parallel to the consumption function. O D. The aggregate expenditure function is flatter than the consumption function and intersects it at the equilibrium output level. 2. Expansionary fiscal policy...

Question