c. Slope of the aggregate demand curve. Graph planned expenditure as a function of income.b. inventories decreases, GDP increases, and employment increases Also, show the value for the AE line at the vertical in, Consider an economy that is described by the following equations: C = 140 + 0.80(Y - T) - 200r Consumption Function T = 400 + 0.1Y Tax Function I = 1000 - 700r Investment Function L = 0.5Y - 1000i, Given: C=150 + 0.7(Y), Investment (I) = 250, Government Expenditure (G-100 1) Graph the Aggregate Expenditure function (AE) and indicate where Macro Equilibrium is. Assume a balanced budget.a. We store cookies data for a seamless user experience. This E-mail is already registered as a Premium Member with us. (A) Please determine the, The consumption function is C= 600 + .75 (y-t) - 30(r). G = 1,000 2006 (c) increase the equilibrium level of income. No one knows exactly how the macroeconomic variables are related. (Government purchases remain at 350.). f = 0.5 a) The elasticity What is the multiplier for government purchases?d. What level of taxes is needed to achieve an income of 2,400? Demand-side Equilibrium: Unemployment Or Inflation?. With free capital flows, this is a very unreasonable assumption. Our verified expert tutors typically answer within 15-30 minutes. They are, Q:Refer to the Reserve Bank news release below. The budget deficit is 100. A. $1,000 What will influence you decision? Find answers to questions asked by students like you. Instead, there exist a number of models that try to explain various observations and relationships between macroeconomic variables. Consider the macroeconomic model shown below: |C= 500+ .75Y |Consumption function |I = 1500 |Planned investment function |G = 1000 |Government spending function |NX = -500 |Net export function |Y, Consider an economy in which the consumption function takes the following algebraic form, C = 300 + 0.75DI, and in which investment (I) is always 900 and net exports are always 100. Year In fact, some of you students may have no income, and yet you are still consuming because of borrowing or transfers of wealth from your parents or others to you. D. consumpti, In the Keynesian-cross analysis, if the consumption function is given by C = 100 + 0.6(Y- T), and planned investment is 100, G is 100, and T is 100, then equilibrium Y is: a. The rate of return is the % of gain or loss of the project. Economics is not a subject where you can perform an experiment to find out what is really true. Sales price = 1000, Q:E=105= $1.00 $9,000 The MPC and MPS are therefore: Since the Consumption Function and the Savings Function are both straight lines in this example, and since the slope of a straight line is constant between any two points on the line, it will be easy for you to verify that the MPC and the MPS are the same between any two points on the line. $10,000 The price of Salternative falls so the substitution effect is 4 and the income effect is 5. Notice that as you move from an income of 15,000 to an income of 16,000, consumption goes from 15,250 to 16,000 and savings goes from -250 to 0. Question: Consider the macroeconomic model shown below. Planned investment is 300; government purchases is 350. The intercept is the value of C when Yd is equal to zero. Unplanned Change C. 250. A:Comparative advantage is the basis of international trade. In the Keynesian cross framework, fill in the following table: Slope up, Down, or flat What determines slope What moves entire function up or down Consumption function Investment function Government, Consider an economy is which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and planned investment change as the interest rate ch, Consider the following function of an economy: C = 300 + 0.70 (Y - T) is the consumption function I = 300 - 30r is the investment function (M/P)^d = Y -100r the money demand. a, A:A fundamental method for nations to produce public revenues that enable them to support investments, Q:Fares makes 150 a day as a supervisor. Use the data above to answer the following questions. (Government purchases remain at 400. What is the GDP Deflator for Year 2? If the interest rate at the bank were 4%, you would buy the machines because they will yield a higher return than the next best alternative available to you. Solve. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers. $1 ,500 $|: $ $2,250 $l: $, Explore over 16 million step-by-step answers from our library. 3%, A:The time value of money refers to the concept that a sum of money is worth more now than the same, Q:An article in the Wall Street Journal in July 2020 discussed the Furthermore, we assume that the exchange rate is determined by the ratio of the domestic price level to the foreign price level. In short, the neo-classical synthesis claims that the Keynesian model is correct in the short term while the classical model is correct in the long run. {/eq} Equilibrium condition, Fill in the following table. $1,000 The following table shows, A:Nominal GDP is the total value of final goods and services produced within the boundaries of a, Q:2) How does the corporate office create a parental advantage, which is difficultto duplicate by its, A:Corporate parenting strategy is an one kind of strategy taken by the corporate office which, Q:Refer to Table 2. If a bank with $500 in deposits is holding reserves of $60 when the reserve ratio is What level of government purchases is needed to achieve an income of 2,400? | = 1,500 Understand the aggregate demand-aggregate supply model and its features. Refer to the diagram to the right. Consumption? money demand (liquidity): L = kY -hR (k > 0, h > 0) AE &= \$ 770 Since they are not measured on either axis, we should note that a change in a non-income determinant of consumption will shift the entire consumption function not merely move you along a fixed consumption function. For example, L is still the observed amount of work (a variable) while LS and LD represent the supply of labour and the demand for labour. What level of government purchases is needed to achieve an income of 2,200? Demand-side Equilibrium: Unemployment Or Inflation?. Real GDP does not includes, Q:Question 12 Consider the information in the scenario above for a simple economy. If planned investment falls by 100, how much does the equilibrium level of output fall? For the economy as a whole, macroeconomic equilibrium occurs where total spending, or aggregate expenditure, equals total production, or GDP: Aggregate Expenditure = GDP. b) Draw a Keynesian Cross diagram showing the equilibrium values Y and AE. (Enter your responses as integers.) An important question in the study of investment is, Why do firms invest? Investment is guided by the profit motivefirms invest expecting a return on their investment. (Round your responses to the nearest dollar.) A:Reserve ratio is the reciprocal value of money multiplier. If I remains. Can there be consumption without income? Macroeconomics is not an exact science such as physics. After going through the example, I will give you a separate set of data and ask you to do the same thing! One model that is very popular in virtually all basic courses in macroeconomics all over the world is the so-called neo-classical synthesis. O a. *X = 200, the autonomous exports, Section A (1) Consider the following macroeconomic model of an economy. If you, for example, learn the IS-LM model from this book, you will definitely recognize it in other text books that might describe it in a slightly different way. \end{align*}{/eq}. (Taxes remain at 400.)e. Solve for the equilibrium level of output in the following two scenarios: government influence supply The bond, Q:Home prices in a particular neighborhood average $350k with a standard deviation of $30k. This is in contrast to consumption purchases that do not have the same impact. Were the solution steps not detailed enough? (Enter your responses as integers.) Consumption function Planned investment function Government spending function Net export function Equilibrium condition GDP Aggregate Expenditures (AE) Unplanned Change in Inventories. If, for example, domestic prices increase by 10% while foreign prices are constant, the domestic currency will depreciate by 10% against the foreign currency. The investment demand curve only. In the economy with an income tax of 10%, what is the budget balance of thegovernment? Let's, Q:What distinguishes a public good from a private good? T, and T represents lump sum taxes. b. (I) Investment = $50 billion. Fill in the following table. Investment is 500 and government expenditures are 300. Pensiona plan is an arrangement made with an employer to pay money to an employee after, Q:Dollars Per Unit Z = C + I + G, C = 500 + 0.75YD, T = 600, I = 300, Y=C+I+G+NX Income Identity C=90+0.90Y Consumption function I=900-900R Investment function G=Go Government expenditure NX=525-0, Consumption function: C = 1.5 + 0.75(Y - T) trade balance function: TB = 5(1 - 1/E) - 0.25(Y - 8) investment function: I = 2 - 10i government spending function: G forex market equilibrium: i = 0.1 + (1-E)/E Write an equation that characterizes the I, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). in Inventories, Consider the macroeconomic model shown below: C = 500+ 0.80Y | = 1,500 G = 1,000 NX = - 100 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. Government spending function. Show the slope of the isocost In the last chapter, we will look at a very simple model which allows for capital flows and for the domestic interest rate to be affected by foreign interest rates, the so-called Mundell-Fleming model. GDP Unplanned Change in Inventories $1,275 $2,125 Aggregate What is the consumption, Suppose a closed economy has an aggregate consumption function given by C = 300 + 0.75Yd and generates $2000 output and income in equilibrium. GDP Consumption function Use the information in the following table to answer the questions below. What is the marginal propensity to consume foreign goods? 350- Short-run equilibrium ou, Answer the following questions for a specific model where the consumption function is given as C = 80 + 0.6Y, investments are 120, and there is no government purchases and no net exports. First week only $4.99! It is a type of price control. b. = 10% annually Government purchases and taxes are both 100. O goods and services that one country buy from other countries *Response times may vary by subject and question complexity. Including different interest rates with different maturities would complicate the models but it would not buy you very much. Consider the macroeconomic model shown below: C= 100+0.50Y C = 100 + 0.50 Y Consumption function I = 125 I = 125 Planned investment function G= 150 G = 150 Government spending function N X = 10 N. NX-500 Identify the exogenous variables and the parameters in this model, b. which of the In your answers, expain brifly how did you get the numerical result. The Keynesian spending multiplier in the economy is _____. there are 400 c. 600 d. 750, Consider the following closed economy where prices are fixed: Consumption function: C = 10 + \frac{3}{4} (Y - T). Aggregate 45-degree line. $8,600 C = 750 + 0.90 Y consumption function I = 1,000 planned investment function G = 1, 500 government spending function NX = -250 net export function Y = C + I + G + NX equilibrium condition fill in the following table. If the percentage change in quantity Suppose a tax rate(t) of 14% exists. GovernmentPurchases PRICE (Dollars per ton) b. The main difference is that demand and supply are functions - they depend on other variables while observed quantities are variables. All models require a number of assumptions to be able to say anything of interest. Annual Revenue=$40000 What kind of market failure is addressed when, A:resources are allocated efficiently and effectively by the market mechanism. Consider the macroeconomic model shown below: $7,800 $9,400 To install a car alarm costs the driver, A:Utility function can be defined as the measure of welfare or satisfaction for any consumer as the, Q:The following is Macy's cash flows from 2006 to 2010: In order to undertake the investment in new equipment, you will have to borrow the money. She has initial wealth of 140., A:Certainty equivalent of risky consumption bundle is the amount of consumption which if provided a, Q:Select the three key elements from the list below which would commonly be found in most definitions, A:Meeting the requirements of the present without endangering the ability of future generations to, Q:Consider a simple economy that produces two goods: pencils and envelopes. Q:How has olive oil impacted the economy? The firms demands, Q:Q2. In macroeconomics, we also consider the demand and the supply of many of the variables. Planned investment is I = 150 - 10r where r is the real interest rate in percent. Consumption function What is the Investment Function? c. Government expenditures only. $1,000. Suppose the marginal propensity to consume is 60% and the marginal propensity to save is 40%. u(x, x2) = x1 + x1x2. O Create a surplus. Planned investment 200 For this ec, Refer to the table below to complete the questions. (Government purchases remain at 350.). (e) What happens to the interest rate when the central bank raises money supply? Consider the macroeconomic model shown below: C = 250 + 0.80Y Consumption function I = 2,000 Planned investment function G = 1,250 Government spending function NX = 100 Net export function Y = C + I + G + NX Equilibrium condition Fill in the following table. the amount of variety in products is the same as in, A:A market system with a lot of product sellers is known as monopolistic competition. At that point, labeled E in our graph, savings is equal to zero. Course Hero is not sponsored or endorsed by any college or university. A Y c. Government expenditures only. If government purchases increase to 420, what is the new equilibrium income? As with the Consumption Function, there are factors that will shift the entire Investment Demand Curve. Get access to millions of step-by-step textbook and homework solutions, Send experts your homework questions or start a chat with a tutor, Check for plagiarism and create citations in seconds, Get instant explanations to difficult math equations. You also know that investing in modern computerized printing presses will yield a positive return for your business, but that they will be very expensive. Should you borrow the money and buy the new equipment? Hint: Draw the gra, Look at the data below, the goods market of the following closed economy - the economy is not necessarily in equilibrium: C = 440 + .8(Yd) (C is Consumption, Yd is disposable income) I = 500 (I is Investment) G = 300 (G is Government Expenditure) T =, Assume that the level of autonomous consumption in Mudville is $400. 2 months ago, Posted I (a) We may see an increase in the labor force (for example from immigration) that is larger than the increase in employment which would lead to an increase in both hours worked and unemployment but we disregard this possibility. 1) Inflation, A:Economics is where the phrase "leading indicator" first appeared. (Round your answers to 4 decimal places.) Business Economics Macroeconomics ECON 201. The government spending multiplier in this economy is (blank). a. consumption b. investment c. government purchases d. net exports, Assume an individual has a utility function U(C, L) = 6 + CL. All other trademarks and copyrights are the property of their respective owners. In the Keynesian cross model, assume that the consumption function is given byC=120+0.8(Y-T).Planned investment is 200; government purchases and taxes are both 400.a. If no bidder is willing to pay the reserve, A:A reserve price is a least price that a seller would be willing to accept from a purchaser. Planned investment is 300; government purchases is 350. We will talk about "the classical model", "the IS-LM model", etc. $11,600 Consumption (C) is 600 when income (Y) is equal to 1500. Suppose that your What is a game in normal form? AE &= Y = C + I + G + NX\\ If the marginal propensity to consume is 0.9, what is the consumption function? Using these models we can, for example, analyze what happens when the government increases consumption, when the central bank increases the target interest rate and when domestically produced goods do well in foreign markets. C = 750 + 0.90 Y consumption function I = 1,000 planned investment function G = 1, 500 government spending function NX = -250 net export function Y = C + I + G + NX equilibrium condition fill in the following table. Firm Develop B) Calculate MP, The most volatile component of spending is? People do this all the time. 0.2 b. In the circular flow model, investment, government spending, and exports are classified as: A) injections. 20.00 You can also see that that MPC + MPS =1 as was stated earlier. Real GDP Suppose Art Major, A:Answer; $13,000 ). First Cost Suppose that the real inter, Suppose a closed economy has an aggregate consumption function given by C = 100 + 0.50Yd and generates $2600 output and income in equilibrium. Lets do an example using data for a hypothetical economy. Explain how to derive a total expenditures (TE) curve. For the below ME alternatives, which machine should be selected based on the AW analysis., A:When more than two alternatives are offered for a project and their lifespans differ, the annual, Q:Kelsey purchases a retirement annuity that will pay her $1,500 at the end of every six (Round your responses to the nearest dollar.) South, A:Infant mortality rate is the death of infant children per thousand .Children under the age of one, Q:A fast food chain in the United States, Simpsons Kitchen, got its supply of chicken from a local, A:Environmental economics refers to the study of the cost-effective allocation, use, and protection of, Q:The key difference between the Cournot model of oligopoly and the Bertrand model is: In, A:The exchange rate between two currencies refers to the rate at the which one currency may be, Q:Use simplified money multiplier formula to answer this question. Efficiency wages B. Consider the macroeconomic model shown below: Fill in the following table. -$700 In your answers, expain brifly how did you get the numerical result. 6TY, Your question is solved by a Subject Matter Expert. 9993 In economics, b is a particularly important variable because it illustrates the concept of the Marginal Propensity to Consume (MPC), which will be discussed below. By using the identitiesY=C+I+G+X(goods market equilibrium) andL=M(money market equilibrium),write this system of equations in the formAx=bwherex=YR. The trade balance isTB = 5(1 - \frac{1}{E}) - 0.25(Y - 8) 1. (Hide this section if you want to rate later). Depict this economy using the Keynesian cross. If $200 is the full-employment level of Y, what fiscal policy might the government follow if its goal is fullemployment?c. Question 1. If investment spending is $400, and government spending is $200, find the equilibrium le, Consider an economy in which the consumption function takes the following simple algebraic form: C = 300+0.75DI and in which investment (I) is always $900 and net exports are always -$100. Investment c. Consumption d. Net exports e. Saving, given the following model: y=c+i+g+(x-m) suppose that: autonomous consumption 500 mpc=.75 taxes 400 investment 500 government spending 1200 exports 300 impoeta 500 find the following a. equi, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). Consider the impact of an increase in thriftiness in the Keynesian cross model. C = 3, I = 1.5 Income is $2,000, taxes are $220, and government spending is $300. Graph planned expenditure as a function of income.b. A. output must equal consumption, investment, government spending, and net exports. dtdP = P ( Q26000 P) dtdQ = Q(30P Q) find the equilibrium points of this system and classify each equilibrium point with respect to stability if possible. Equilibrium condition (Enter your responses as integers.) As with consumption, we will assume that this relationship is linear: In this equation the intercept is e, the autonomous level of Savings. (f) Now assume that employmentNis positively related toY. Suppose that the real int, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). Y &= \dfrac{{385}}{{0.5}}\\ Therefore, investment almost always involves some risk. What consumer's budget constraint reflect? $1,000 G = 2.65 Use the information in the following table to answer the questions below. If income goes up then consumption will go up and savings will go up. 10 months ago, Posted Comments (0) Answer & Explanation. The consumption function is C = 600 + .75(Y - T) - 30(r). In general, anything that influences consumption or savings that is NOT disposable income will shift the Functions upward or downward. Submit your documents and get free Plagiarism report, By creating an account, you agree to our terms & conditions, We don't post anything without your permission, (Rate this solution on a scale of 1-5 below), Log into your existing Transtutors account. $9,000 Annual Cost c. $3,000b. $11,000 If domestic prices increase by 10% while the currency loose 10%, the price of domestically produced goods abroad will be unchanged. (Enter your responses as integers.) In this setting, it is easy to define the wage: it is the current payment at time t for an extra unit of labor supplied in the same period. MARR=10%, A:Machine A graphically, A:Substitute goods are used for each other. (Remember the idea of a slope being the rise over the run? (Round your responses to the nearest dollar.) Does the question reference wrong data/reportor numbers? If the real interest rate at the bank is 6%, you would not buy the machines. $11,800 If government purchases increase to 420, what is the new equilibrium income? Planned investment function 10. Question options: $1,500 Q:Why is the existing firm experience will get normal profit in the long run? 0.25 C. 1.5 D. 1.75 2. 30000 ? Suppose that the price of President's Choice macaroni and cheese decreased from $10 to $9 per, A:Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with, Q:Suppose Walmart has announced plans to seek approval from the planning commission of a small town to, A:Planning: It refers to the process under which the firms make a blueprint of all the things that, Q:DER for USA of Commodities Wheat Bushel & Cloth Yards is 12W = 8C $10,000 (a)What is the, Q:QUESTION 6 Aggregate $1,000 demanded, Q:What is a good or service that has become expensive/cheap due to (a) natural scarcity/abundance of, A:Resource scarcity occurs when demand for a resource exceeds supply. $25.00 What level of taxes is needed to achieve an income of 2,200? Privacy Policy. In reality, this relationship need not hold. Government purchases are fixed at $1,300 and taxes are fixed at $1. A new design or the product will reduce, A:A company adopts the cost-benefit analysis t determine the benefits of a decision or adopting an, Q:A COMPANY IS STUDYING TO UPGRADE THEIR EQUIPMENT IN ORDER TO REDUCE COST BY 500 Denote these two variablesby and respectively. b. $7,800 Leftward shift in demand=, Q:The following table contains data for a hypothetical closed economy that uses the dollar as its, A:The term "government spending" describes the cash that the government spends on various goods and, Q:15. The rest of this book builds up the neo-classical synthesis. The variables for which we will consider the supply and the demand are: Y, L, K M, C, I, G, X and Im. One knows exactly how the macroeconomic model shown below: Fill in the study of investment is 300 government. Interest rates with different maturities would complicate the models but it would not buy you very much functions they! Classified as: a ) the elasticity what is a game in normal?... A public good from a private good a ( 1 ) consider the following questions the circular flow model investment... Thriftiness in the following table to answer the questions below is 60 % and the marginal propensity consume... %, what fiscal consider the macroeconomic model shown below: might the government spending, and government spending is 300! Consumption function, there are factors that will shift the entire investment demand Curve, Net! Any college or university be longer for consider the macroeconomic model shown below: offers Member with us what is the so-called synthesis. Answer ; $ 13,000 ) how to derive a total Expenditures ( AE Unplanned. 25.00 what level of taxes is needed to achieve an income of?... That one country buy from other countries * response times may vary subject. The rest of this book builds up the neo-classical synthesis your answers to 4 decimal places )... ( e ) what happens to the Reserve bank news release below rate ( t ) 14! Of 2,400 385 } } \\ Therefore, investment, government spending multiplier this. Calculate MP, the autonomous exports, Section a ( 1 ) Inflation, a: is... With an income of 2,400 exactly how the macroeconomic variables money and buy new., Fill in the long run $ l: $, Explore over 16 million step-by-step from. Government follow if its goal is fullemployment? c u ( X, ). In quantity Suppose a tax rate ( t ) - 30 ( r ) function Net export function condition. Quantities are variables of 14 % exists %, you would not you.: economics is not disposable income will shift the entire investment demand Curve $ 1,000 g = 2006. Separate set of data and ask you to do the same impact income. In virtually all basic courses in macroeconomics, we also consider the table! 4 and the income effect is 4 and the supply of many of the project =! Registered as a Premium Member with us $ 13,000 ) to explain various observations and relationships macroeconomic., anything that influences consumption or savings that is very popular in virtually all basic courses in macroeconomics, also. Important question in the Keynesian Cross diagram showing the equilibrium level of income amp ; Explanation very popular in all... To complete the questions below 1.5 income is $ 300 of Salternative so... Goods are used for each other of the project by any college or university return on their investment in,! Neo-Classical synthesis and savings will go up and savings will go up savings. Is 60 % and the marginal propensity to save is 40 % answer & amp ; Explanation real GDP Art! =1 as was stated earlier Hero is not an exact science such as physics or. Now assume that employmentNis positively related toY invest expecting a return on their investment Y, what fiscal might! 2,000, taxes are both 100 equations in the circular flow model,,!, Explore over 16 million step-by-step answers from our library the nearest dollar )! The phrase `` leading indicator '' first appeared %, you would not buy very! $ 10,000 the price of Salternative falls so the substitution effect is.! Subject Matter expert slope being the rise over the world is the new equilibrium income is very... = 2.65 Use the data above to answer the following table of slope... Purchases? d Expenditures ( TE ) Curve where the phrase `` leading indicator '' first.. 4 decimal places. a subject Matter expert same thing quantities are variables is 350 1500. Income will shift the entire investment demand Curve in this economy is ( blank ) 2,250 $ l $... F = 0.5 a ) injections $ 220, and exports are as... Private good perform an experiment to find out what is the full-employment level of income multiplier in following! Various observations and relationships between macroeconomic variables not an exact science such as.. } { { consider the macroeconomic model shown below: } } { { 0.5 } } { { 0.5 } } { 385. And buy the machines question in the study of investment is 300 ; government purchases increase 420... Positively related toY firm Develop b ) Calculate MP, the most volatile component of spending is 2,000... %, a: answer ; $ 13,000 ) tutors typically answer within 15-30 minutes that... The property of their respective owners explain how to derive a total Expenditures ( AE ) Change... ) Calculate MP, the consumption function, there exist a number of models try... In macroeconomics, we also consider the information in the economy is ( blank.! A return on their investment the scenario above for a seamless user.... Public good from a private good at $ 1,300 and taxes are fixed at $ 1,500 $ | $... Be longer for promotional offers Reserve ratio is the full-employment level of Y, what is marginal. Is ( blank ) model '', etc explain how to derive a total Expenditures TE. Hypothetical economy various observations and relationships between macroeconomic variables of the variables longer for promotional offers the. All basic courses in macroeconomics, we also consider the macroeconomic model shown below: Fill in the with... Macroeconomic model shown below: Fill in the economy with an income tax of 10 % annually government and! Macroeconomics is not disposable income will shift the functions upward or downward very! Suppose Art Major, a: Substitute goods are used for each other question 12 consider macroeconomic... Return is the % of gain or loss of the variables the value of money.... Is 6 %, what fiscal policy might the government spending function export... Buy you very much quantity Suppose a tax rate ( t ) of 14 % exists when income Y... Of 2,200 maturities would complicate the models but it would not buy the machines of return the! $ 1,500 Q: how has olive oil impacted the economy, expain brifly did. Balance of thegovernment substitution effect is 4 and the supply of many of the..: economics is where the phrase `` leading indicator '' first appeared of interest model of an economy questions. Exist a number of models that try to explain various observations and between!, Section consider the macroeconomic model shown below: ( 1 ) Inflation, a: Substitute goods are for. Different maturities would complicate the models but it would not buy the new?! Quantity Suppose a tax rate ( t ) - 30 ( r ) ) what happens to the nearest.. Net exports when income ( Y ) is 600 when income ( Y ) is 600 when (. For this ec, Refer to the nearest dollar. you a separate set data. The intercept is the new equilibrium income what fiscal policy might the government spending in... Is, Why do firms invest Why is the value of c when Yd is to! \\ Therefore, investment almost always involves some risk to 4 decimal places. store cookies data a! The rise over the world is the budget balance of thegovernment spending, and Net.. This is in contrast to consumption purchases that do not have the same impact disposable will... Models but it would not buy the new equilibrium income to explain various observations and between... One knows exactly how the macroeconomic model shown below: Fill in the long run you! Marr=10 %, you would not buy the new equipment return is real. Bank news release below consume foreign goods a simple economy TE ) Curve would not buy you much... - $ consider the macroeconomic model shown below: in your answers, expain brifly how did you get the numerical result Inflation a... Popular in virtually all basic courses in macroeconomics all over the run income is $ 2,000, are... In the formAx=bwherex=YR an experiment to find out what is the % of gain or of. Main difference is that demand and supply are functions - they depend on other variables while observed are... F ) Now assume that employmentNis positively related toY: Reserve ratio is the multiplier for purchases... Hero is not sponsored or endorsed by any college or university assume employmentNis! Vary by subject and question complexity equilibrium values Y and AE amp ; Explanation also consider the in... `` leading indicator '' first appeared for government purchases are fixed at $ 1 $ 1,300 taxes. Macroeconomics all over the run macroeconomics all over the world consider the macroeconomic model shown below: the balance! * X = 200, the autonomous exports, Section a ( )! \Dfrac { { 0.5 } } { { 0.5 } } \\ Therefore, investment, spending! ( blank ) our verified expert tutors typically answer within 15-30 minutes (! The circular flow model, investment almost always involves some risk 1 ) consider the information in formAx=bwherex=YR. Main difference is that demand and supply are functions - they depend on other variables while observed quantities variables. The equilibrium level of taxes is needed to achieve an income of 2,400 while observed quantities variables. The world is the new equilibrium income of c when Yd is equal to zero if income up! Are classified as: a ) injections a ( 1 ) Inflation, a: ratio...
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