Quiz 9 1)Suppose that I earn $250,000; I spend $230,000 and I save $20,000. According to...

Quiz 9

1)Suppose that I earn $250,000; I spend $230,000 and I save $20,000. According to theKeynes, what wouldhappen with the $20,000 that I saved?

a.All $20,000 would be loaned out and spent

b.Some of the money might be loaned out and spent, but probably not all of it.

2)Suppose that I earn $250,000; I spend $230,000 and I save $20,000. According to the Classical Economists, what would happen with the $20,000 that I saved?

a.All $20,000 would be loaned out and spent

b.Some of the money might be loaned out and spent, but probably not all of it.

3)Right now, the market for loanable funds operates at equilibrium. But, interest rates are not flexible at all and are fixed at 3.0%. If I suddenly save $50,000, how much of that $50,000 will be borrowed?

a.All$50,000 will be borrowed

b.Between $0 and $50,000 will be borrowed

c.$0

4)The current minimum wage is $7.25. Suppose the US government decides to place a $12 minimum wage just for the month of August as an experiment with the minimum wage returning to $7.25 in September. If this occurs, what can we expect will happen on August 1st? Answer this question using Classical Economic theory.

a.SRAS will shift right

b.SRAS will shift left

c.LRAS will shift right

d.LRAS will shift left

e.SRAS and LRAS will shift right

f.SRAS and LRAS will shift rig

Solutions

Expert Solution

1)Suppose that I earn $250,000; I spend $230,000 and I save $20,000. According to theKeynes, what wouldhappen with the $20,000 that I saved?

b.Some of the money might be loaned out and spent, but probably not all of it.

2)Suppose that I earn $250,000; I spend $230,000 and I save $20,000. According to the Classical Economists, what would happen with the $20,000 that I saved?

a.All $20,000 would be loaned out and spent

3) Right now, the market for loanable funds operates at equilibrium. But, interest rates are not flexible at all and are fixed at 3.0%. If I suddenly save $50,000, how much of that $50,000 will be borrowed?

b.Between $0 and $50,000 will be borrowed

b.SRAS will shift left

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Suppose a family with 1 child has $20,000 per year to spend on private goods and...

Suppose a family with 1 child has $20,000 per year to spend on private goods and education, and suppose all education is provided privately. Draw the family’s budget set. Suppose now there is free public education available, at a price of $4000 per year per child. Draw 3 different indifference curves for each of 3 types: 1) those where free education would lead to an increase in the amount of education spending for their kids, 2) those for whom the...

Consider a hypothetical economy in which households spend $0.50 of each additional dollar they earn and save the remaining $0.50.

4. Fiscal policy, the money market, and aggregate demand Consider a hypothetical economy in which households spend $0.50 of each additional dollar they earn and save the remaining $0.50. The following graph shows the economy's initial aggregate demand curve (AD1). Suppose the government increases its purchases by $3.5 billion.Use the green line (triangle symbol) on the following graph to show the aggregate demand curve (AD2) after the multiplier effect takes place. Hint: Be sure the new aggregate demand curve (AD2) is parallel...

Suppose you save $75 a month for 30 years. If you are able to earn 6%...

Suppose you save $75 a month for 30 years. If you are able to earn 6% per year on your savings, how much will you have accumulated by the end of 30 years? Assume monthly compounding.

Suppose that households spend 60% of each additional dollar in income that they earn. How much...

Suppose that households spend 60% of each additional dollar in income that they earn. How much will Real GDP rise when autonomous spending increases by $250?

Suppose you borrow $ 20,000 at a 9% monthly compound, for 5 years. Knowing that 9%...

Suppose you borrow $ 20,000 at a 9% monthly compound, for 5 years. Knowing that 9% represents the market interest rate, the monthly payment cn current dollars It will be $ 415. 17. If the average monthly general inflation rate is expected to be 0.5%, what will be the annual equivalent of monthly payments equal cn constant dollars?

Consider a hypothetical economy where there are no taxes and no international trade. Households spend $0.90 of each additional dollar they earn and save the remaining $0.10.

Consider a hypothetical economy where there are no taxes and no international trade. Households spend $0.90 of each additional dollar they earn and save the remaining $0.10. If there are no taxes and no international trade, the oversimplified multiplier for this economy is $_______.Suppose investment spending in this economy increases by $200 billion. The increase in investment will lead to an increase in income, generating an increase in consumption that increases income yet again, and so on.Fill in the following...

Suppose that I am spending $6,000 every month, but now I suppose to save $2,000 every...

Suppose that I am spending $6,000 every month, but now I suppose to save $2,000 every month and only spend $4,000. According to the classical economists, how will this decision to save affect my country’s RGDP? RGDP will increase RGDP will decrease RGDP will not change Suppose that the current wage rate in a market is $14 per hour and the equilibrium wage rate is $12. Given this information, we can assume that… The quantity of labor supplied will exceed...

1. Consider two individuals. Both earn the same amount and choose to save the same amount....

1. Consider two individuals. Both earn the same amount and choose to save the same amount. However, the first agent is more risk averse than the second. i) Do you expect the saving portfolios to be different for the two agents? Which of the two is more likely to hold stocks? Now, assume that the second individual is actually much wealthier than the first. ii) Do you expect the two agents to rely on the same type of financial intermediaries?...

PMT = (PV)i 1 − (1 + i)−n .A loan of $250,000 is amortized over 30...

PMT = (PV)i 1 − (1 + i)−n .A loan of $250,000 is amortized over 30 years with payments at the end of each month and an interest rate of 6.3%, compounded monthly. Use Excel to create an amortization table showing, for each of the 360 payments, the beginning balance, the interest owed, the principal, the payment amount, and the ending balance. a) Find the amount of each payment. $ b) Find the total amount of interest paid during the...

Suppose that I have an income of $240 to spend on cat food (good x) and...

Suppose that I have an income of $240 to spend on cat food (good x) and cat toys (good y). The price of food is $30 per bag and the price of toys are $10 each. My utility function is given as U(x,y)=xy a) Solve my optimization problem. What is the optimal amount of food and toys that I should buy? b) Suppose I can get a Costco membership for $60 and I can buy cat food for $20 per...

Subjects