Question

In: Economics

Assume an economy where there are no supply constraints and where businesses want to invest 15...

Assume an economy where there are no supply constraints and where businesses want to invest 15 billion; government collects 20 billion in income taxes and also spends 20 billion; next exports are -5 billion; autonomous consumption is 10 billion; and the MPC is 0.8

a) Write out the Aggregate Expenditure function and calculate the equilibrium level of income.

b Now assume that the government increases both taxes and expenditures by 25 percent. What happens to the equilibrium level of income?

8)A math course has 3 tests during the semester and a test. Each test counts for 20 percent of the course grade, and the test counts for 40 percent of the course grade. JJ has scored 50 out of 100 in each of the 3 tests. What grade does JJ need to get in the test (score out of 100) in order to reach the score of 60 for the whole course?

Solutions

Expert Solution

a) AD function=>

  

Applying this formula and putting all the values in, we get EQUILIBRIUM LEVEL OF INCOME = $120 BILLION

b) We use the same formula but the value of tax and government expenditure increase by 25%.

Applying this formula and putting all the values in, we get EQUILIBRIUM LEVEL OF INCOME = $125 BILLION

c) 3 tests have 20% weightage while another test has a weightage of 40%. To get total of 60 marks in the course grade we apply the formula given in the picture above and we get that 75 out of 100 marks must be scored in the test having weightage of 40% of course grade to get a total of 60 marks


Related Solutions

Consider an economy where consumers spend C, businesses invest I, and there is no government for...
Consider an economy where consumers spend C, businesses invest I, and there is no government for simplicity (TR = T = 0). In this economy we can write Consumption as: ? = ? + MPC∗GDP The economy also imports some amount of goods, but it does not export anything. We can represent imports (M) by the following: ? = ? + MPCF ∗ ?DP where MPCF can be thought of as the marginal propensity to consume foreign goods and F...
Covid-19 as a large bulldozer is an apt image where businesses and the economy are concerned....
Covid-19 as a large bulldozer is an apt image where businesses and the economy are concerned. But whilst our day to day lives have changed, for business, the show must go on — or else risk complete failure. It is undeniable that some businesses won’t be able to thrive during this period. But with creative thinking and a change of tactics, many businesses will be able to adapt and succeed, even during a lockdown. Select one industry in the list...
Covid-19 as a large bulldozer is an apt image where businesses and the economy are concerned....
Covid-19 as a large bulldozer is an apt image where businesses and the economy are concerned. But whilst our day to day lives have changed, for business, the show must go on — or else risk complete failure. It is undeniable that some businesses won’t be able to thrive during this period. But with creative thinking and a change of tactics, many businesses will be able to adapt and succeed, even during a lockdown. Select one industry in the list...
Suppose the housing market is characterized by supply constraints, such that the supply is fixed in...
Suppose the housing market is characterized by supply constraints, such that the supply is fixed in the short-run: X S=100. The market demand function for housing is D(X)=1000-4X, where X is the number of houses in the market. 1. Which side, demand or supply, is less price elastic in the housing market? {Enter D for demand, or enter S for supply, or enter E if you think that they are equally price elastic} 2) What is equilibrium number of houses...
In an economy, the supply of labour is given by S = 10 + 200Wn, where...
In an economy, the supply of labour is given by S = 10 + 200Wn, where S is the quantity supplied of labour (hours of work), and Wn is the after-tax wage rate (net wage). Assume that the before-tax wage rate is fixed at $10. a) Find the quantity supplied of labour and the total tax revenue at the following tax rates: 15%, 30%, 50%, 70%, and 80%. b) Calculate the net wage elasticity of labour supply at each of...
In an economy, the supply of labour is given by S = 10 + 200Wn, where...
In an economy, the supply of labour is given by S = 10 + 200Wn, where S is the quantity supplied of labour (hours of work), and Wn is the after-tax wage rate (net wage). Assume that the before-tax wage rate is fixed at $10. a) Find the quantity supplied of labour and the total tax revenue at the following tax rates: 15%, 30%, 50%, 70%, and 80%. b) Calculate the net wage elasticity of labour supply at each of...
In an economy, the supply of labour is given by S = 10 + 200Wn, where...
In an economy, the supply of labour is given by S = 10 + 200Wn, where S is the quantity supplied of labour (hours of work), and Wn is the after-tax wage rate (net wage). Assume that the before-tax wage rate is fixed at $10. a) Find the quantity supplied of labour and the total tax revenue at the following tax rates: 15%, 30%, 50%, 70%, and 80%. b) Calculate the net wage elasticity of labour supply at each of...
Assume a coordinate system where the origin is the point where supply pack is released, the...
Assume a coordinate system where the origin is the point where supply pack is released, the positive x axis is the direction the plane is flying and the positive y axis points downward.   Assume the horizontal and vertical components of the air resistance are proportional to the square of the velocities Using the appropriate model using accuracy to the nearest foot rounding off at the end of the problem, determine the horizontal distance the pack travels assuming The plane altitude...
53.) Assume that the economy is initially in a long-run equilibrium. Now suppose that businesses and...
53.) Assume that the economy is initially in a long-run equilibrium. Now suppose that businesses and households become more pessimistic about the future and decide to invest less in new structures, tools, and equipment, and also decide to engage in less consumption spending, at the current price level. a.) What will happen to output and the price level in the short run? Output will (rise, fall, stay the same) and the price level will (rise, fall, stay the same). (2...
Assume that investors want to invest in the most efficient (aka optimal) portfolios. The existence of...
Assume that investors want to invest in the most efficient (aka optimal) portfolios. The existence of a risk-less security in the risk & return trade-off: does not influence investors preferences regarding which risky portfolio to hold. Results in investors all holding different portfolios of risky assets depending on their individual risk preferences Results in investors all holding the same portfolio of risky assets which corresponds to the tangency point of the efficient portfolio frontier of risky assets and a line...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT