Suppose the consumption function is C=$700 billion + 0.8 Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with Instructions: Enter your responses as a whole number.
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- Assume that Consumption is C = c(Y-T); Taxes T = tY; Investment / = -bi; and Government expenditure (G) is exogenous. Determine the multiplier for an increase in the tax rate.Equation for consumption is C=40/(0.8Y) where Y= yearly income = $400. The marginal propensity to consume is _______?An economy is described by the following equations: C= 60 +0.75 (Y - T) IP= 100 G= 150 NX= 30 T= 180 Y*= 760 The multiplier in this economy is 4. a. Find a numerical equation relating planned aggregate expenditure to output. Instructions: Enter your response for mpc rounded to two decimal places. PAE= b. Construct a table to find the value of short-run equilibrium output. Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Planned aggregate Output Y expenditure (PAE) Y - PAE 620 720 820 920 1,020 Short-run equilibrium output is c. By how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have to change? In order to eliminate any output gap, government purchases would have to be reduced by In order to eliminate any output gap, taxes would have to be increased by d. If Y*=856, then by how much would government purchases have to change in order to eliminate any…
- An economy is described by the following equations: C = 80+ 0.9 (Y-T) IP = 100 G = 150 NX = 30 T = 180 Y* = 1,800 The multiplier in this economy is 10. a. Find a numerical equation relating planned aggregate expenditure to output. Instructions: Enter your response for mpc rounded to one decimal place. PAE = + Y b. Construct a table to find the value of short-run equilibrium output. Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Output Planned aggregate expenditure Y (PAE) 1,780 1,880 1,980 2,080 2,180 Y- PAE Short-run equilibrium output is . c. By how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have to change? In order to eliminate any output gap, government purchases would have to be (Click to select) reduced increased by. In order to eliminate any output gap, taxes would have to be (Click to select) increased reduced by . d. If y* = 2,070, then by…economics Consider a goods market equilibrium (The aggregate expenditure model) in a closed economy a) Equationally and graphically (using the graph above) show (define) a goods market equilibrium b) Explain which factor changes the slope of the ZZ(or D, demand) curve and which factors shift the ZZ curve c) Suppose that marginal propensity to consume is equal to 0.8. Explain how much an increase in government spending 500 million of dollars raises real output and why output increases more than government spending?An economy is described by the following equations: C = 80+ 0.9 (Y-7) IP = 100 G NX T = 180 Y* = 1,800 The multiplier in this economy is 10. a. Find a numerical equation relating planned aggregate expenditure to output. Instructions: Enter your response for mpc rounded to one decimal place. PAE = + Y = 150 Output Y = 30 b. Construct a table to find the value of short-run equilibrium output. Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. 1,780 1,880 1,980 2,080 2,180 Planned aggregate expenditure (PAE) Y- PAE Short-run equilibrium output is. c. By how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have to change? In order to eliminate any output gap, government purchases would have to be (Click to select) reduced increased by . In order to eliminate any output gap, taxes would have to be (Click to select) increased reduced by . d. If y* = 2,070, then by…
- True or False? In the long-run general equilibrium, MPK = MPL.Which shows income and consumption levels for period 1 through 7, what is the marginal propensity to consume ?As you know, supply and demand shifts are caused by one of their determinants. Shifts in aggregate demand (AD) show the effect of events on price level and Real GDP. Any event that causes a change in consumer, business, or government spending or any change in net exports (C+l+G+Xn) will shift AD. Any event that causes a change in production costs or increases productivity will shift aggregate supply (AS). Decide if the following events are Micro, shifting supply or demand, or Macro, shifting AD or AS. Give the direction in which the graph shifts. Demand Situation Aggregate Supply Aggregate Demand Supply Sales of Atlanta Braves gear grows with the success of the team. 1. The President and Congress pass a trillion dollar stimulus bill to provide aid during recession. 2. 3. Salmonella outbreak in peanut processing plants threatens lunches for school children. 4. Pomegranates are shown to be cancer fighting superfoods. Value of U.S. dollars declines, exports increase. 5. Global oil prices…
- The total expenditure in Macroland begins with these initial levels (in trillions of dollars): autonomous consumption=1, Investment = 2; Net Exports = 0, T=2, and MPC = 0.75. Assume that equilibrium has been achieved. Suddenly there is an external shock and as a result investment goes down to 1. What is the change in GDP? Use the base model to answer this question. Equilibrium GDP goes down by 1 Equilibrium GDP goes up by 1 Equilibrium GDP goes up by 4 Equilibrium GDP goes down by 4Given the following model of an Economy as follows:- (10 marks) C = 50 + 0.7 Yd (Yd = Y-T) (Consumption & Expend) I = 100 (Investment Expend) X = 20 (Exports ) M = 10 – 0.27 (Imports) T=25 interepret the consumption Function i) Determine Equilibrium level of National Income ii) Consumption level at Equilibrium level of Income iii) Total import at equilibrium IncomeAn economy is described by the following: C=20+0.9Y I=120-200r. Md=250+0.2Y-400r. Ms/P=1250 Y=70 W=17.5 Lf=144 a) Find AS and AD. b) Find the equilibrium level of Y and P c) Graphically represent this economy d) Find the long-run Y of this economy. e) What is the level of government expenses G, the government needs to impose in order to lead the economy to the full employment? (Show the long-run graphically).
