Suppose MPC = 0.8 and MPL = 20. For each of the following, compute ΔS (change in national saving) in a closed economy. a. ΔG = 100 b. ΔT = 100 c. ΔY = 100 d. ΔL = 10
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Suppose MPC = 0.8 and MPL = 20. For each of the following, compute ΔS (change in national
saving) in a closed economy.
a. ΔG = 100
b. ΔT = 100
c. ΔY = 100
d. ΔL = 10
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- How does the slope of the IS curve of a closed economy compare with that of an open one? Reasons for this.Given the following on a closed economy. C = 40 + 0.8Yd C= consumption I = 55 – 200r I= Investment G = 20 G = government spending T = 20 T = Taxes Ye = 400 Ye = National Income r = rate of interest Determine the following: The equilibrium level of consumption The level of investment The level of interest rateAssume that total expenditure E comprises the sum of government consumption, G, household consumption, C, and investment, I. Assume a closed macroeconomic system, so that income equals expenditure Y=E. If we define household saving, SH, as SH=Y-T-C, where the cunsumption function is a fixed proportion of disposable income, C=c(Y-T), which of the following will be true? a. Higher government spending alongside unchanged taxation will lead to higher investment and higher household saving b. Higher government spending alongside unchanged taxation will have no effect on household saving or investment c. Higher government spending alongside unchanged taxation will lead to higher household saving d. Higher government spending alongside unchanged taxation will lead to lower household saving
- Assume the following information for an imaginary, closed economy. GDP = $120,000; consumption = $70,000; private saving = $9,000; national saving = $12,000. Refer to Scenario 26-1. For this economy, taxes amount to a. $44,000. b. $41,000. c. $38,000. d. $28,000.Consider an economy described by the following data:C = $3.25 trillionI = $1.3 trillionG = $3.5 trillionT = $3.0 trillionNX = - $1.0 trillionf = 1mpc = 0.75d = 0.3x = 0.1a. Derive simplified expressions for the consumptionfunction, the investment function, and the net exportfunction.b. Derive an expression for the IS curve.c. If the real interest rate is r = 2, what is equilibriumoutput? If r = 5, what is equilibrium output?d. Draw a graph of the IS curve showing the answersfrom part (c) above.e. If government purchases increase to $4.2 trillion,what will happen to equilibrium output at r = 2?What will happen to equilibrium output at r = 5?Show the effect of the increase in government purchases in your graph from part (d).Given the following on a closed economy.C = 40 + 0.8Yd C= consumptionI = 55 – 200r I= InvestmentG = 20 G = government spendingT = 20 T = TaxesYe = 400 Ye = National Incomer = rate of interest Find: The level of Private savingsThe level of Public savingsThe level of national savings
- Assume an economy where spending for each sector is: Household: C = 800 + 0.95Q Business: I = 3000 Public: G = 4000, Tr = 7000, Tx = 1000 + 0.3Q Foreign: X = 1700, Im = 200 + 0.165Q Solve for Consumption Expenditure, Household Savings, Imports https://www.bartleby.com/questions-and-answers/assume-an-economy-where-spending-for-each-sector-is-household-c-800-0.95q-business-i-3000-public-g-4/849c5d9a-4bb7-48c4-8b89-ccc576cdc909A simple Macro model. In a closed economy (no trade), the government does three things. It purchases goods and services (G), it collects tax revenue (T) and it makes transfers to household and businesses (TR). G = 50 T = 20 + 0.2 × Y T R = 10 − 0.1 × Y where Y is national income. The basic consumption function is given by C = 30 + 0.8 × YD where YD is disposable national income. The desired investment is an autonomous term I = 30 a) Write down the equation for the AE (aggregate expenditure) function for this economy. b) Compute the equilibrium level of national income in this economy. c) Compute the value of the simple multiplier.In a closed economy, subsistence consumption is 10 billions, households spend 60% of their net disposable income on leisure consumption, investment is constant at 40 billions, taxes are 20 billions, government spending is 20 billions and the gross domestic product is 145 billions. Assume that suppliers always respond to variations in demand, that it takes them 1 month to adjust to new demand levels and that they make adjustments once per month (if any). One day, the government increases its spending to 30 billions. After 2 months (at the end of the 2nd month), by how much has the gross domestic product increased? Select one: a. 16 b. 25. c. 32 d. 50
- Given the following on a closed economy.C = 40 + 0.8Yd C= consumptionI = 55 – 200r I= InvestmentG = 20 G = government spendingT = 20 T = TaxesYe = 400 Ye = National Incomer = rate of interest Dertermine the equilibrium level of consumptionCalculate investment expenditure from the following data about an economy which in equilibrium: National income =$1000 Marginal propensity to save=$0.25 Autonomous consumption expenditure=$200Suppose that disposable income, consumption, and saving in some country are $800 billion, $700 billion, and $100 billion, respectively. Next, assume that disposable income increases by $80 billion, consumption rises by $56 billion, and saving goes up by $24 billion. Instructions: In part a, round your answers to 2 decimal places. In part b, round your answers to 3 decimal places. a. What is the economy's MPC? MPC = What is its MPS? MPS = b. What was the APC before the increase in disposable income? АРС before%3D What was the APC after the increase? APC after =
