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option for blank #1: current and future government spending are, only future spending is, current and future consumer spending are, only current spending is option fo blank #2: taxes, consumption option fo blank #3: an equal and opposite, an equal option fo blank #4: taxes, consumption option fo blank #5: real GDP, unemployement rate, real interest rate option fo blank #6: consumption of individuals, government spending

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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Suppose that for a particular economy, for some time period, consumption was given by theconsumption function C = 300 + 0.9YD, investment was equal to 200, government expenditure wasequal to 100, net taxes were fixed at 100, exports were equal to 200, and imports were given by theimports function Z = 10 + 0.1YD. Note that YD represents disposable income. a.Suppose households earn $150 more in their disposable income. How much more would theyconsume in total? How much go to domestic goods and how much go to imported goods? Howmuch would they end up saving? b.What is the level of equilibrium income? What about the level of consumption and import? c.What are the values of the government spending multiplier, tax multiplier and balanced-budgetmultiplier? d.Suppose the investment level suddenly declined by 20. How should the government stabilize theeconomy? Please provide all options in detail
The Life-Cycle/Permanent Income Model of Consumption makes a different prediction from the Keynesian Model, about how Consumption reacts to an increase in current income. Which of the following is the best description of the difference? O In the Keynesian Model, consumers will increasktheir spending by the mpc times the increase in income. In the Life-Cycle/Permanent Income Model, consumers will not increase their spending by much unless they believe that the increase in their income is permanent. O In the Life-Cycle/Permanent Income Model, consumers will increase their spending by the mpc times the increase in income. In the Keynesian Model, consumers will only increase their spending if they believe that the increase in their income is temporary. O In the Keynesian Model, consumers will increase their spending by the mpc times the increase in income. In the Life-Cycle/Permanent Income Model, consumers will only increase their spending if they believe that the increase in their income…
. Suppose an economy is represented by the following equations.Consumption function C = 100 + 0.8YdPlanned investment I = 38Government spending G = 75Exports EX = 25Imports IM = 0.05YdAutonomous Taxes T = 40Planned aggregate expenditure AE = C + I + G + (EX - IM)a. By using the above information calculate the equilibrium level of income for thiseconomy. b. Calculate the value of expenditure multiplier. c. Suppose that government spending is increased by 5, what will happen to theequilibrium income level?
Given the following consumption function, C = 400 + 0.75YD,where C= consumption expenditure, YD = disposable income, Investment= $1200, Government spending = $1600,Exports = $500, Imports = $600, Taxes = $1200 and Potential GDP = $9000Choose corrcct optiona) Aactual output is less than potential outputb) actual output is zeroc) actual output is equal to potential outputd) actual output is higher than potential output
Use the information in the following table to answer the questions below. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Also, for simplicity, assume this economy has no taxes. In your answers, expain brifly how did you get the numerical result. Real GDP Consumption PlannedInvestment GovernmentPurchases Net Exports $9,000 $7,800 $1,500 $1,000 -$700 $10,000 $8,600 $1,500 $1,000 -$700 $11,000 $9,400 $1,500 $1,000 -$700 $12,000 $10,200 $1,500 $1,000 -$700 $13,000 $11,000 $1,500 $1,000 -$700 $14,000 $11,800 $1,500 $1,000 -$700 (a) What is the equilibrium level of real GDP in this economy? (b) Compute the marginal propensity to consume. (c) Compute the government expenditures multipler. (d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?
Use the information in the following table to answer the questions below. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Also, for simplicity, assume this economy has no taxes. In your answers, expain brifly how did you get the numerical result. Real GDP Consumption PlannedInvestment GovernmentPurchases Net Exports $9,000 $7,800 $1,500 $1,000 -$700 $10,000 $8,600 $1,500 $1,000 -$700 $11,000 $9,400 $1,500 $1,000 -$700 $12,000 $10,200 $1,500 $1,000 -$700 $13,000 $11,000 $1,500 $1,000 -$700 $14,000 $11,800 $1,500 $1,000 -$700 Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?
We found that for every $1 increase in G there is a multiplied impact on output with, in the most 1 basic model, a multiplier of A study by economists at the New York Fed conducted 1- MPC during the COVID-19 recession found that "as of the end of June 2020, a relatively small share of stimulus payments-ljust] 29 percent-was used for consumption." What is the G multiplier based on that estimated MPC and the formula from the basic model?
CThe following equations describe an economy C = 100 + 0.75 Y. I = 50 – 25i where C' is aggregate consumption , Y is disposable income, I is aggre gate investment, Tis taxes, G is go vernment purchases and i is the int erest rate. Derive the IS curve for th T= G= 50 e economy.
Suppose MPC equals 0.9, government taxes 30% of all incomes, and the marginal propensity to import equals 0.07. The economy's real GDP is currently $5,454 billion while its potential real GDP is $6,000 billion. Glven a horizontal SRAS curve, what change in government spending on goods and services would bring the economy to full employment real GDP? When doing the calculations, round the value for the multiplier to 2 decimal places, and round your final value for the change in G to the nearest billion.
YAS 1548 + 19P - 12Poil YAD = 412 – 33P+ 26G %3D Suppose initially, the Poil = $86 per barrel and government spending is equal to $780. Part (a): Calculate equilibrium GDP and the price level. Part (b): Determine the magnitude of the simple multiplier if oil prices exogenously rise by $1. Part (c): Determine the magnitude of the simple multiplier if government spending exogenously increases by $1.
From March 2020 to March 2021, the US enacted three fiscal packages to stimulate the economy and support businesses and households following the dislocations of COVID19. The rationale for these temporary payments was based on the Keynesian consumption function, according to which an increase in income increases consumption spending and boosts the economy. The data shown in the chart on the next page for disposable income, with and without the stimulus payments, and personal consumption expenditures. While disposable income clearly rises substantially when the stimulus payments are included, personal consumption expenditures follows a different path, mimicking disposable income without the stimulus payments. Use economic theory to explain what is going on here, Billions of Dollars 22,000 Disposable Personal Income less Economic Impact Payments Disposable Personal Income with Economic impact Payments 20,000 Personal Consumption Expenditures 18,000 16,000 14,000 12,000 01 04 07 10 01 04…
Hi there . can you please assit on the following below Q.1. HOW DOES GOVERNMENT SPENDING AFFECT THE LEVEL OF AGGREGATE AUTONOMOUS SPENDING , THE MULTIPLIER AND THE EQUILIBRIOUM INCOME IN THE ECONOMY?