In a simple two-sector Keynesian model, if MPC=75%, what is the size of the multiplier?
  
                
                

10. What is the equilibrium level of income in this Keynesian model?

        When DI (AP) = 1000, C=1200, Ip=300, G=200, Exports=100, Imports=50
        When DI (AP) = 2000, C=2000, Ip=300, G=200, Exports=100, Imports=100
        When DI (AP) = 3000, C=2800, Ip=300, G=200, Exports=100, Imports=150
        When DI (AP) = 4000, C=3600, Ip=300, G=200, Exports=100, Imports=200
        When DI (AP) = 5000, C=4000, Ip=300, G=200, Exports=100, Imports=250

  
                              1000          2000          3000          4000          5000

What would you say about a business that had the following Balance Sheet and Income Statement:

Balance Sheet

Cash $2000

Inventory $2500

Accounts Receivable $8000

Property, Plant, Equipment $30,000

Land $30,000

Total Assets $72,500

Liabilities

Accounts Payable $1,000

Notes Payable $9,000

Long-Term Debt $45,000

Total Liabilities $55,000

Equity $17,500

Income Statement

Revenues $11000

Cost of Goods Sold $2000

Selling Expenses $1000

Other Expenses $2000

Be sure to mention at least one important element of the Balance Sheet, one important element of the Income Statement, and one important element for how the two interact both now and in the future if the Income Statement is repeated again in the next time period.

1. The General Social Survey polled a sample of 209 people aged 18-30 in the year 2000, asking them how many hours per week they spend on the internet. The sample mean was 6.75 with a standard deviation of 7.7 A second sample of 541 people aged 18-30 was taken in 2006. For this sample, the mean was 7.34 and standard deviation of 10.93. Assume these are simple random samples from populations of people aged 18-30. Can you conclude that the mean number of hours per week spent on the internet increased between 2000 and 2006?

1. Do the hypothesis test with α=0.05 significance level.

2. Construct a 95% confidence interval for the difference in mean number of hours spend per week on the Internet between 2000 and 2006.

3. Calculate the Margin of Error for 95% confidence level.

3. a) How would economic contraction brought about by Covid – 19 slowdown be represented using production possibilities curve? b) Repeat a) for improved technology which results in increased productivity

4.

1. Good                    Quantity              Price in 1999                     Price in 2000

X                            10                          $5                                         $6

Y                            20                          $10                                      $10

Z                            5                            $6                                         $10

Assume year 2000 is the base year.

1. Calculate the market basket value for each year. What is the consumer price index in 1999?
2. What is the inflation rate between 1999 and 2000?

Show all calculations please.

2. India has a higher GDP than Austria. However, Austria has a higher GDP/Capita than India. Which of the two indicators represent a higher quality of life? Why?

1. Suppose I give you the following data on Canada: Year Output Capital Population 1960 100 100 1000 2000 300 200 1500 a) What are the growth rates of output, capital and population between 1960 and 2000? b) Suppose that the aggregate production function is: Y = AK^(1/2)N^(1/2) What is the growth rate of productivity between 1960 and 2000? c) Do the growth accounting excercise. What share of output growth can be attributed to productivity, capital and population? Hint: The shares should sum up to 1. d) What is the average annual growth rate of output, productivity, capital and population over these 40 years? Hint: Just divide the total growth rates by 40.

2. Consider an economy that produces and consumes bread and automobiles. In the following table are data for two different years.

(a) Using 2000 as the base year, compute the following statistics for each year: nominal GDP, real GDP, the implicit price deflator for GDP, and a fixed-weight price index such as the CPI.

(b) How much did prices rise between 2000 and 2010? Compare the answers given by the Laspeyres and Paasche price indexes. Explain the difference.

(c) Suppose you are a senator writing a bill to index Social Security and federal pensions. That is, your bill will adjust these benefits to offset changes in the cost of living. Will you use the GDP deflator or the CPI? Why?

A company offers a bond with exactly 100 years to maturity (now 2000 to 2100) and its face value $2,000 that makes coupon payments at the end of each year.

Issue date: 2000; Maturity date: 2100

Coupon rate: 8%

2000 price: $2,000

2005 price: $1500

2010 price: $2,020.5

Q1: What is the interest rate in 2005 in market?

Q2: Sam bought this bond in 2005(yr) right after it made its coupon payment (he did not collect the coupon). Bob bought another bond at the same time with the same coupon rate, issue date and face value but a maturity date of 2015. Bob did not collect the coupon in 2005 either. It is 2010 now, if they were to sell their bonds today who would make more money?

In Table 1.5, examine the private health insurance, Medicare, and Medicaid components. Which category grew the most between 1970 and 2014? Between 2000 and 2014? What factors might have led to the differences in the growth rates?

2. The growth rates between 1970 and 2014 are calculated as follows:

Private health insurance = (868.8/14.1)-1 = 6061.70%

Medicare = (580.7/7.3)-1 = 7854.80%

Medicaid = ( 444.9/5)-1 = 8798%

Hence, Medicaid had the highest growth rate between 1970 and 2014.

Similarly,

The growth rates between 2000 and 2014 are calculated as follows:

Private health insurance = (868.8/406.1)-1 = 113.93%

Medicare = (580.7/216.3)-1 = 168.47%

Medicaid = ( 444.9/186.9)-1 = 138.59 %

Hence, Medicare had the highest growth rate between 2000 and 2014.

In May 2000, the U.S. Treasury issued 30-year bonds with a coupon rate of 6.25%, paid semiannually. A bond with a face value of $1,000 pays $31.25 (1,000 × 0.0625 / 2) every six months for the next 30 years; in May 2030, the bond also repays the principal amount, $1,000.

(a) What is the value of the bond if, immediately after issue in May 2000, the 30-year interest rate increases to 7.5%?

(b) What is the value of the bond if, immediately after issue in May 2000, the 30-year interest rate decreases to 5.0%?

(c) On a graph in Excel, show how the value of the bond changes as the interest rate changes (plot the value as a function of the interest rate). At what interest rate is the value of the bond equal to its face value of $1,000?