. Assume a simple closed Keynesian model where the MPC is 0.9 and the MPIM is 0.1. Also assume that potential real GDP is $2000 million, while actual (equilibrium) real GDP is $1200 million.
a. What is the GDP gap?
b. Is there an inflationary or recessionary gap?
c. What change in government spending is required to restore the economy to full
employment GDP? Show graphically using a Keynesian cross diagram.
d. What change in lump-sum taxes would bring about the same result?
e. Now assume that a Balanced Budget Amendment is passed, so that increases in
government spending must be accompanied by equal increases in lump-sum
taxes. What change in both G and T will close the GDP gap? (HINT: What is
the balanced budget multiplier in this model?)
In: Economics
Compare the effect on GDP of an adverse demand shock in the closed and open economy cases using graphs based on the open economy IS-MP model. Assume flexible rate.
In: Economics
The data in the table below is for a closed-polygon traverse. The running direction is North
| Course | Azimuth | Length (m) | Interior Angles |
| AB | 75∘14′47′′ | 411.838 | A=12∘25′31′′ |
| BC | 380.225 | B=48∘19′25′′ | |
| CD | 336.213 | C=126∘37′24′′ | |
| DE | 330.191 | D=46∘03′36′′ | |
| EA | 90.125 |
E=306∘34′19′′ |
a. Compute the preliminary bearings.
b.Compute the unadjusted departures.
c. Compute the unadjusted latitudes.
d. Compute the linear misclosure.
e. Compute the relative precision.
In: Civil Engineering
The trial balance follows of the Larkspur, Inc. as at December 31. The books are closed annually on December 31.
| Larkspur, Inc. Trial Balance December 31 |
||||
| Debit | Credit | |||
| Cash | $112,500 | |||
| Accounts receivable | 63,000 | |||
| Allowance for doubtful accounts | $8,850 | |||
| Land | 347,000 | |||
| Buildings | 582,000 | |||
| Accumulated depreciation—buildings | 38,000 | |||
| Equipment | 315,000 | |||
| Accumulated depreciation—equipment | 123,500 | |||
| Prepaid insurance | 10,000 | |||
| Common shares | 867,670 | |||
| Retained earnings | 151,000 | |||
| Sales revenue | 412,500 | |||
| Rent revenue | 44,880 | |||
| Utilities expense | 74,600 | |||
| Salaries and wages expense | 89,300 | |||
| Repairs and maintenance expense | 53,000 | |||
| $1,646,400 | $1,646,400 | |||
Instructions: A)Enter the balances in ledger accounts.
B) From the trial balance and the information that follows, prepare annual adjusting entries.
| 1. | The buildings have an estimated life of 30 years with no residual value. (The company uses the straight-line method.) | |
| 2. | The equipment is depreciated at 10% of its year-end carrying value per year. | |
| 3. | Insurance expired during the year was $5,300. | |
| 4. | The rental revenue is the amount received for 11 months for dining facilities. The December rent of $4,080 has not yet been received. A Rent Receivable account is used. | |
| 5. | It is estimated that 20% of the accounts receivable will be uncollectible. | |
| 6. | Salaries and wages earned but not paid by December 31 amounted to $3,730. | |
| 7. | Sales revenue included dues paid in advance by members and totalled $9,550. |
C) Post annual adjusting entries to the ledger accounts: (Post entries in the order of journal entries presented in the previous part.)
In: Accounting
Question 1. In a closed economy, the consumption function is given by C = 200 + 0.75(Y-T). The investment function is I = 200 – 25r. Government purchases and taxes are both 100. The money demand function in the economy is (M/P)d = Y – 100r. The money supply M is 1,000 and the price level P is 2.
a. Derive the equations of IS and LM curves.
b. Find the equilibrium interest rate r and the equilibrium level of income Y, given the price is fixed. Graph the IS and LM curves and the equilibrium r and Y.
c. Derive an equation for the aggregate demand curve in this economy.
In: Economics
In a closed, isolated system of particles, forces internal to the system do not change the motion of the system as a whole. The velocity of the center of mass of such a system is unchanged unless the system is impacted by some net external force. In this context, and with the aid of a single illustration, explain what is meant by a) internal force, and b) external force. c) Explain why internal forces have no effect on the system’s motion.
In: Physics
Suppose the current equilibrium point for the market of good for a closed economy is (200, $100). Also we know the ɛ = -2 and n = 1.5 at the equilibrium point. Suppose the economy is now open to trade. Let $110 Pw = $110 .
a) What is the domestic price?
b) What is the size of the export?
In: Economics
Considering a geyser in a home, classify each of the
following as an open system, closed system,neither or both:
(a) the geyser is being filled with cold water
(b) hot water is being drawn from the tap
(c) the geyser leaks
(d) the heater is turned on to heat the water
(e) the geyser is full and the heater is turned off.
In: Other
Suppose that North Korea is a closed economy.
A war breaks out abroad and, as a result, North Korean consumers become uncertain about the future and increase their saving rate.
1) Explain what effect this event would have on the North Korean economy. You do not need to draw the graph, but you do need to describe which curves move and in what direction. No points will be given for answers without an explanation.
2) How would the following variables change as a result of this event?
In: Economics
6. (14 pts) There is a decrease in income in a closed economy. Derive the impact of the decrease in income on the credit market and money market assuming flexible prices. Determine the impact on the equilibrium expected real rate of interest and the price level. Also determine the impact on equilibrium savings, investment, and real balances. You must use graphs to receive hill credit
In: Economics