Assume the information for the economy is the following: C = c0 + c1Yd, where c0...

Assume the information for the economy is the following:

C = c0 + c1Yd, where c0 = 400 and c1 = 0.75

I = 700

G = 500

T = 600

Write out the full Z equation … and include the numbers
Find the multiplier
Find the autonomous parts of Z
Find Y = Z using equilibrium = multiplier x autonomous
Find Y = Z using full Z equation method
Find Saving
Show that (S – I) = (G – T)
If I increases to 900, what is equilibrium Y = Z?
If T falls by 100, how much does equilibrium Y=Z change?

Expert Solution

Rahul Sunny answered 3 years ago

Assume the following information for the economy: C = c0 + c1Yd, where Yd = (1-t)Y ...

Assume the following information for the economy: C = c0 + c1Yd, where Yd = (1-t)Y C = 200 + 0.75(1-.2)Y I = I I = 700 G = G G = 800 X = X X = 400 M = mY M = 0.1Y Find the savings.

5. Assume you are given the following information for the economy of Macroland: GDP C ...

5. Assume you are given the following information for the economy of Macroland: GDP C S I G (X – M) AE 0 200 _____ _____ _____ 0 _____ 500 600 _____ 200 100 0 _____ 1000 1000 _____ _____ _____ 0 _____ 1500 ____ _____ _____ _____ 0 _____ 2000 1800 _____ 200 100 0 _____ 2500 2200 _____ 200 100 0 ...

Suppose the economy is characterized by the following behavioral equations: (12 marks) C=c0 +c1YD YD =...

Suppose the economy is characterized by the following behavioral equations: C=c0 +c1YD YD = Y – T I=b0 +b1 Y Government spending and taxes are constant. Note that investment now increases with output. (1) Solve for equilibrium output. (2) What is the value of the multiplier? How does the relation between investment and output affect the value of the multiplier? For the multiplier to be positive, what condition must (c1 + b1) satisfy? (3) Suppose that the parameter b0, sometimes...

Given a closed, private economy where aggregate demand (AD) can be represented as AD = c0...

Given a closed, private economy where aggregate demand (AD) can be represented as AD = c0 + c1Y + I0 where c0 is autonomous private consumption, c1 is the marginal propensity to consume, I0 is autonomous business investment, and Y is national income.Central banks conduct monetary policy. Explain how through their conduct of monetary policy central banks can influence the level of economic activity in an economy.

Assume an economy where GDP (Q) is measured by Q= C+I+G+ (X - Im) .Assume Consumption...

Assume an economy where GDP (Q) is measured by Q= C+I+G+ (X - Im) .Assume Consumption (C) is defined by C = 800 +0.95Qd and Investment (I) is defined as I = 1500. Government Purchases (G) is given as G = 2000, Transfer payments (Tr) is given as Tr = 3300, Taxes (Tx) are given by Tx = 300 + 0.4Q Exports (X) are defined as X = 750 and Imports (Im) are defined as Im = 400 + 0.07Q...

. Assume you are given the following information for the economy of Macroland: GDP...

. Assume you are given the following information for the economy of Macroland: GDP C S I G (X – M) AE 0 200 _____ _____ _____ 0 _____ 500 600 _____ 100 100 0 _____ 1000 1000 _____ _____ _____ 0 _____ 1500 ____ _____ 100 100 0 _____ 2000 1800 _____ 100 100 0 _____ 2500 2200 _____ 100 100 ...

The amount of carbon-14 present in a tree is given by the formula C(t)=C0e−.00012t, where C0...

The amount of carbon-14 present in a tree is given by the formula C(t)=C0e−.00012t, where C0 is the amount of carbon-14 present in it at the time of its death and t is the number of years that have elapsed since it died. If the plant has 15% of its original carbon-14, how old is it?

Assume the following model of the economy, with the price level fixed at 1.0: C =...

Assume the following model of the economy, with the price level fixed at 1.0: C = 0.8(Y – T) i = 1000 – 20r T = 500 G = 1,000 Ms = 1,000 Md/P = 0.5Y – 50ra A) What are the short-run equilibrium values of Y, and r. B) Assume that T decreases by 100. By how much will Y increase in short-run equilibrium? C) Assume that T is back at its original level of 500, but Ms (money...

Assume the following Keynesian model for the economy of Boogerland: AE = C + I +...

Assume the following Keynesian model for the economy of Boogerland: AE = C + I + G + (X - M) C = 600 + .9Yd I = 200 G = 100 X = 200 M = 100 + .1Yd T = 100 a. Find the aggregate expenditure function and equilibrium level of GDP. b. Using a “Keynesian cross” (or 45-degree line) diagram, show graphically the equilibrium in part a). c. What is the spending multiplier in this model? Tax...

Given the following information about a closed economy. Consumption C=100+0.8Y Investment I = 1200-30r where r...

Given the following information about a closed economy. Consumption C=100+0.8Y Investment I = 1200-30r where r is the interest rate Y is Income. The precautionary and speculative demand for money is as follows. MD1=0.25Y MD2 = 1375-25r Money supply Ms =2500 a) find the equilibrium values of Y and r. b) Assume that a budget is now introduced in to the economy and that consumption is given by C= 100+0.75Yd Yd=Y-T T=20+0.2Y if government expenditure G = 935 i) find...

Question