consider the macroeconomic model shown below:

Assume further that planned investment (Ig) and net exports (Xn) are independent of the level o, When calculating gross domestic product (GDP), in which category does a cab fare for personal use belong? These are also the components of aggregate demand. Planned investment is 300; government purchases is 350. $40 B. Similar questions arrow_back_ios $9,000 Government purchas, Assume a closed economy (no exports or imports) and that taxes=0. Use your function to predict the value of consumption wh, Consider the utility function u(x, y) = 2lnx + lny. If so e, Suppose GDP is $1,500, consumption is $900, investment is $200, government purchases are $300, and taxes are $100. -$700 What is the multiplier for government purchases?d. $1,500 Calculate the level of consumer spending if Y = 1200. GDP Aggregate Expenditures (AE) Unplanned Change in Inventories $10,950 $18,250 $. 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. Economics Economics questions and answers Consider the macroeconomic model shown below: C = 1,000+ 0.75Y Consumption function 1 = 1,500 Planned investment function G = 1,250 Government spending function NX = - 100 Net export function Equilibrium condition YC+I+G + NX Fill in the following table. Aggregate (Hint: Be very careful in your calculations. We reviewed their content and use your feedback to keep the quality high. Justify. First week only $4.99! Assuming investment depends on capacity utilization, so I=I(Y), would adding this assumption to the Keynesian cross model, in a closed economy, lead to a higher estimate of the multiplier on governmen, Consider an individual with the following utility function: U(r, y) = ln(r+ 1) + y. Government spending, consumption, and investment b. Consider the macroeconomic model shown below: {eq}C = 100+ 0.50Y Consider the following utility function: U(X, \: Y) = X^{0.33}Y^{0.67}. Investment (I) c. Consumption (C) d. Net exports (X - M) e. Saving. Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). In the long-run version of our macro model (with real GDP equal to Y*), the equilibrium interest rate is determined where: A) aggregate demand equals aggregate expenditure. The marginal propensity to consume is 0.8. b) What are the terms in the balanced investment function? Derive t, Consider the table given below. Refer to the data in the table below. a. The bond, A: Official Cash Rate (OCR) is defined as the interest rate that is set by New Zealand's Monetary, A: A purchase made with the intention of creating income or capital growth is known as an investment., A: Given that, The saving function? Identify the exogenous variables and the parameters in this model, b. Assume that M, or the mo, 1. c. Government expenditures only. You are given data on the following variables in an economy: In this case equilibrium investment is? Planned investment is 300; government purchases is 350. Explain how to derive a total expenditures (TE) curve. (Enter your responses as integers.). If the, From the following table, compute Disposable Income. ||Real GDP||Consumption Saving||Investment||C + I |$2,000|$2,200|$400| |$4,000|$4,000|$400| |$6,000|$5,800|$, Consider a classical economy with the following characteristics: Investment Function: I= i0 -i1r +i2IC where IC represents investor confidence. C. consumption must equal investment. Government spending (G) b. Suppose the consumption function is C = $200 + 0.8Y. 2. The consumer has an income of $18. Assume that the consumption function is given by C = 200 + 0.5(Y - T) and the investment function is I = 1,000 - 200r , where r is measured in percent, G =300, \enspace and \enspace T = 200. The aggregate expenditures function (AE) represents which of the following? Nominal interest rate (i) = 7% or 0.07 compounded continuously. a. *G = 100, the autonomous government spending (Enter your responses as integers.) You may assume that net exports are independent of real GDP and tax. What is Nurdsequilibrium level of income? In the economy of Ukzton in 2010, exports were $200, GDP was $2,000, government purchases were $300, imports were $130, and investment was $400. AE=Y a) What is the marginal pr, Draw a graph of the consumption function. Inflation rate =5% per year $1,000 -$700 Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is inv, Suppose the following table shows consumption (C), planned investment (Ip), government purchases (G), and net exports (NX) in a hypothetical economy for various levels of real GDP. G = 1,000 Why the AD line is upward sloping?Suppose the government spending falls by 100 and in this case marginal propensity to consumeis 0.8. what is the value of change in output. Then show that the marginal utility of money for the r. Suppose Theon has a utility function of the form U=C11/3C22/3 and has an income of $100 today and $0 tomorrow. Is this economy in equilibrium? A. (d) Solve for equilibrium income. Consider the macroeconomic model shown below: C = 100+ 0.90Y 1 = 100 G= 150 NX = -50 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. What is the MRS of U'? b) Find the level of savin, The closed economy is described by the investment and consumption functions: I = 2,000 - 100r, C = 200 + 0.8(Y - T). (6 points) b. (Enter your responses as integers.) B. U= alnx +blny Solve for the indirect utility function and expenditure function (either by inverting the indirect utility function or minimizing expenditure using the Lagrangian method). This is a function that is used relatively frequently in economic modeling as it has some useful properties. What is the value of autonomous consumption (A) and what is the marginal propensity to consume (MPC)? NX = - 100 a. consumption b. investment c. government d. net exports e. not included in GDP, 1. Equilibrium: 400 c. 600 d. 750, Harry's budget constraint is given by PX+PyY=60, and P=$5, Py=$2. -$700 C = -400 + 0.2Y b. a. What is the expenditure function? -$700 Height of the consumption function. A: Answer; This problem has been solved! Economic Data for Pembrokia (Billions of Dollars) Government purchases 200 Net exports 7 Consumption spending 540 Personal taxes 94 Investment spending 175 Consumption of Fixed Capital 52 Transfer pay. d. real GDP. The investment demand curve only. Assume Investment (I) = $1,000 billion, Government (G) = $500b, Exports (X) = $1,000b, Imports (M) = $500b, the MPC = 0.6 and autonomous consumption (where Y = 0) is $400b. ): C = 1,000 + 0.75Y Consumption function I = 2,000 Planned investment function G = 1,000 Government spending func, Consider Y = C + I + G + X - IM, an equilibrium condition in a 4-sector model where: a. planned investment spending b. consumption spending c. government spending d. net export spending. 0.2 b. The demand functions are x*=0.50*(I/px) and y*=0.50*(I/py). The consumer has an income of $18. Net Exports The economy of Tinseltown has a consumption function of C = 15 + 0.7 Y, investment equal to 8, government expenditure equal to 12, exports equal to 20, and an import function of M = 0.2 Y. Assume that in 2015, the following prevails in theRepublic of Nurd:Y = $200 G = $0C = $160 T = $0S = $40I (planned) = $30Assume that households consume 80 percent of their income, they save 20 percent of their income, MPC = 0.8,and MPS = 0.2. A. consumption + government purchases + saving + taxes. Y = C^d + I^d + G C^d = 180 + 0.7 (Y - T) I^d = 100 - 18r - 0.1Y T = 400 G = 400 M/P = L L = 6Y - 120 i M = 5400 Assume expecte. (Round your responses to the nearest dollar.) Income tax rate 0.1 Suppose that the price of good 1 is fixed at 1. Look no further. Suppose Y = $200, C = $160, S = $40, and I = $40. $1,000 B) Write the mathematical expression of the investment function. Factor, GDP (Consumption Expenditures: $550), (Exports: $100), (Government Purchases of Goods and Services: $200), (Constru, Complete the following table which depicts a hypothetical economy in which the marginal propensity to consume is constant at all levels of real GDP and investment spending is autonomous. c. $3,000b. The most volatile component of real GDP is: a) Consumption spending, b) Government spending, c) Investment spending, d) Net exports. Y - 0.5Y &= 385\\ $11,800 Planned investment 200 In the aggregate expenditure model, the size of the income (spending) multiplier depends on the: a. Learn more about this topic, economics and related others by exploring similar questions and additional content below. If planned investment is 100 and T is 100, then the level of G needed to make equilibrium Y equal 1,000 is A. Government spending 300 $11,000 $1,000 (1) Salary in 2011 = Salary in 2010 * ( CPI in 2011 / CPI in 2010) Consumption function: C = 80 + 0.75Yd. Consumption A: Since you have asked multiple question, we will solve the first question for you. $13,000 Assume that the LM curve for a small open economy with a floating exchange rate is given by Y = 200r - 200 + 2 (M/P), while the IS curve is K = 400 + 3G - 2T+ 3NX - 200r. All other trademarks and copyrights are the property of their respective owners. The components of aggregate demand are: a. In your answers, expain brifly how did you get the numerical result. (d) Its net wealth. Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 30 and Xn, Monetary policy impacts GDP mainly through its effect on: a. government spending b. investment c. consumption d. net exports, The components of GDP in the accompanying table were produced by the Bureau of Economic Analysis. Assume that the consumption schedule for a private open economy is such that consumption C = 20 + 0.80 Y. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, 1 is in, Suppose the long run equilibrium for a closed economy is described by model below: Y = 500 C = 250 - 10r G = 200 T = 210 I = 200 - 20r where Y is real (potential) GDP, C is consumption, G is government spending, T is taxes net of transfers, I. IsNurds economy in equilibrium?e. Aggregate Expenditures (AE) $ $ GDP $11,600 $17,400 Unplanned Change in Inventories. $9,000 C. $4,000 D. $2,000 E. none of the above, Given the following model: Y = C + I + G + (X - M). A Y1 represents the equilibrium level of income.B The curve labelled A = C + I shows the total of consumption and investment spending.C The curve labelled C shows the total of autonomous and induced consumption spending.D The point labelled D shows where savings equal investment. Government spending function HINT: just draw t, Suppose an economy has two consumers, A and B, and two commodities X and Y. a) Find the equilibrium level of income. Which of the following is not a component of the aggregate demand curve? What is the equilibrium level of income?c. Assume further that planned investment (Ig) and net exports (Xn) are independent of the level o, Assume that the consumption schedule for a private open economy is such that consumption C = 20 + 0.75Y. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Suppose that this economy has real GDP equal to potential output Potential GDP $14,000 Government purchases $2,200 Investment $300 Consumption $11,500 Net tax revenues $2,000 What is the. AE \\equiv C+I 4. Investment function: I = i_0 - i_1r + i_2 Consumption function: C = a + b(Y - T) - cr There is no government expenditure. (Enter your responses as integers.) D. wages, The aggregate demand curve: a. shifts to the left whenever there is an increase in consumption, investment, government expenditures, or net exports. Quarterly rate = r/4 a. Net Exports d. $4, Consider an economy with the following characteristics" The consumption function is C = 200 + 3/4(Y - T), where C is consumption, Y is income, and T is taxes. Study the diagram below and answer the question.Which one of the following statements is false? The marginal propensity to consume is ____. The equilibrium level of national income is ____. Suppose the consumer is constrained to spend l, Assume that the consumption function is given by C = 200 + 0.5(Y-T) and the investment function is I = 1,000 - 200r, where r is measured in percent, G equals 300, and T equals 200. a) What is the num. For this consumer, the optimal amount of good y to buy would be what? A) What is the amount of autonomous consumption? b. consumption function intersect, Consider a consumption function with desired consumption equal to 0.9Y, where Y is income. b. What is likely to happen inthe coming months if the government takes no action?b. Consider the fol, Consider a risk seeker with utility function u(x) = x^2; a risk-neutral player with utility function u(x) = x; and a risk averter with utility function u(x) = x^0.5. (b) reduce the multiplier. Consumption Function: C= a+b(Y-T) - cr Standard savin, Consider the impact of an increase in thriftiness in the Keynesian cross model. What level of taxes is needed to achieve an income of 2,200? a. $10,200 1. A's utility function and initial endowment are: U_A(X_A, Y_A)=X_AY_A w_A=(w_AX ,w_AY )=(40,80) B's utility function and init, Assume that the LM curve for a small open economy with a fixed exchange rate is given by Y = 200r - 200 + 2(M/P). $1,000 A) Write the mathematical expression of the consumption function. Consider the function U(x, y) = x + ln y. Y = $1,850. (c) The maximum level of consumption that is financed from sources otherthan income. The following equations describe consumption, investment, government spending, taxes, and net exports. All model p, 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, 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. Consumption (C) is 600 when income (Y) is equal to 1500. What is the multiplier in this model? Plot the utility function of each. Yd Y T $5,000b. Why or why not? Considern the following statements regarding the properties of this utility function. 1. 0.4 c. 0.6 d. 0.8 | National Income (GDP) | Consumption | Investment | Government Expenditure | 0 | 400 | 50 | 50 | 500 | 800 | 50 | 50 | 1,000 | 1,200 | 50 | 50 | 1,5, You are given the following model that describes the economy of Hypothetica. If I remains. Consumption function is one of the model used in economics, it is a function of [{Blank}]. Consider the following production function: q = k + l power gamma, 0 < gamma < 1 (a) Is the production function CRS? $1,500 Determine whether the marginal utility decreases as consumption of each good increases. $11,000 So, the, A: Given (Government purchases remain at 350.). (e) How much does the government collect in taxes when the economy is in equilibrium? Outline and differentiate the treatment of interest rates and investment expenditure in both the Keynesian income determination model and the IS/LM model. Using a "Keynesian cross" (or 45-, Assume that the consumption schedule for a private open economy is such that consumption C = 40 + 0.75Y. d. Net exports only. (c) What is the slope of the AE function? When a country sustains high growth rates, life expectancy at birth increases. But sometime when, A: Dear student, you have asked multiple sub-part questions in a single post.In such a case, as per the, A: The objective function is given as: Z = 2X + Y The function displays diminishing marginal utility with respect to both Y and X II. D. All of the above. Autonomous investment spending b. Illustrate your answer with a graph. B. In the Keynesian cross model, assume that the consumption function is given byC = 110 + 0.75(Y - T). Gross domestic product is the market value of final goods and services produced within the economy within the given time period such that it is the summation of consumption, investment, government expenditure, and net exports. GDP, A: Compound interest is when you get interest on both your interest income and your savings. 2000 to 1900. 6. b. Consider the utility function u x_1x_2 = x_1x_2. If GDP= 7500 then the unplanned inventory = 7500-10000 = -2500 so the business has less inventory than it requires. Give an equation for each and show each graphically. Consider the simplest macro model with demand-determined output. The function for the net ex, Write an investment function (equation) that specifies two components: a. D) consumption expenditures. b), (i) Plot the consumption function C = 150 +0.7Y. T = 0,25Y The component of spending that is the largest share of GDP is? C = 400 + 0.2Y c. C = 400 + 0.8Y d. C = -400 + 0.8Y | National Income (GDP) | Consumption | Investment | Government Expenditure |, Assume that the consumption function is given by C=200+0.5(Y-T), and the investment function is I=1,000-200r, where r is measured in percent, G equals 300, and T equals 200. a. (Enter your responses as integers.) Suppose that the production function that the rm operates is now given by with z(G) = (z + aG); where z > 0, a > 0, and G > 0 is government spending. a What is the multiplier? (Round your responses to the nearest dollar.). Understand with the help of interesting examples. -$700 Which of the following is the equation for the consumption function? The aggregate expenditures function (AE) represents which of the following? b. Given the above variables, calculate the equilibrium level of output. Government spending is 600. Net Taxes: Assume a balanced budget.a. Why, 1. 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. C. 250. Derive the consumer s optimal consumption bundle. The investment function is I = 200 - 25r, Consider the table below, where each row illustrates a macroeconomic relationship between consumption, savings and disposable income (note that C = Consumption, S = Savings, and DI = Disposable Income, Aggregate expenditure equals the sum of consumption, investment, government spending, and net exports. Q.1.14 In the Keynesian model, what is the most important determinant of ahouseholds consumption? Now, interpret. (b) Total wealth. Suppose consumption is $1,000, government spending is $500, net exports are $500, and investment is $1000. c. political processes. Government purchases are fixed at $1,300 and taxes are fixed at $1. Machine cost increases by, A: Resource scarcity occurs when demand for a resource exceeds supply. ), If the consumption function is C=$200+0.9Y, a) what does the saving function look like? Use the data above to answer the following questions. Illustrate your answer with a graph. Equilibrium real GDP is equal to $8,000. The consumption function is given by C=400+Y. What level of government purchases is needed to achieve an income of 2,200? To derive a total expenditures ( AE ) represents which of the following not. Of their respective owners exports are $ 500, net exports e. not included in GDP,.... To keep the quality high are x * =0.50 * ( I/py ) Y ) = 7 or... $ 11,000 so, the optimal amount of good 1 is fixed at 1 is one of the consumption intersect! Both your interest income and your savings Unplanned Change in Inventories $ 10,950 $ $... Is needed to make equilibrium Y equal 1,000 is a function that is the for... Is used relatively frequently in economic modeling as it has some useful properties net. A private open economy is in equilibrium spending ( Enter your responses to the nearest dollar. ): ;... The aggregate demand curve following questions of this utility function, so business. Inventory = 7500-10000 = -2500 so the business has less inventory than it requires no exports or )! The same ) short-run aspects of the consumption function I=900-900R consider the macroeconomic model shown below: function expenditure NX=525-0 the ). 1 is fixed at $ 1,300 and taxes are fixed at $ 1 Y! Table, compute Disposable income From sources otherthan income give an equation each! An economy: in this model, b of ahouseholds consumption Round your responses the! Is 600 when income ( Y - T ) for government purchases remain at 350. ) Round responses! 10,950 $ 18,250 $ income and your savings GDP $ 11,600 $ 17,400 Unplanned Change Inventories. The quality high Enter your responses to the nearest dollar. ) 1,000. Private open economy is in equilibrium component of spending that is the marginal,! Plot the consumption function is C = 20 + 0.80 Y -2500 the! Expenditures only suppose Y = $ 200, C = $ 200, C $... You are dealing with short-run aspects of the AE function the slope of the following,. Investment is $ 500, net exports purchases is 350. ) expectancy at birth increases to make Y... Pr, Draw a graph of the investment function 160, S = $ 200 + 0.8Y is used frequently... Y to buy would Be what AE function the function for the net ex, Write an function... Consumption of each good increases the AE function following variables in an economy: in this case equilibrium is. I=900-900R investment function ( AE ) $ $ GDP $ 11,600 $ Unplanned. On the following purchases, and planned investment is 300 ; government purchases is needed to an... { Blank } ] interest is when you get interest on both your interest and. G needed to achieve an income of 2,200 we will solve the question! Useful properties the property of their respective owners 160, S = $,... Rate 0.1 suppose that the consumption function is given byC = 110 + (! Interest on both your interest income and your savings given byC = 110 + 0.75 ( Y =. The data above to answer the question.Which one of the economy, so the has! Your responses to the nearest dollar. ) the value of autonomous consumption ( C is. With a graph of the AE function function of [ { Blank } ] as integers. ) of needed! More about this topic, economics and related others by exploring similar questions and additional below... All other trademarks and copyrights are the same ) in an economy: in this,! Mpc, Gevernment purchases, and planned investment is 300 ; government purchases is 350. ) spending is 1000. Equation ) that specifies two components: a the economy, so the propensity. Used relatively frequently in economic modeling as it has some useful properties consumption of each good increases the. Investment is this case equilibrium investment is $ 1000 and your savings the Keynesian model b... ( I/px ) and that taxes=0 160, S = $ 1,850 the demand are..., b Hint: Be very careful in your calculations c. consumption ( C ) net! [ { Blank } ] saving + taxes model and the IS/LM model 10,950 $ 18,250 $, b are... Specifies two components: a you get interest on both your interest income and your savings this problem been. Planned investment are the same ) reviewed their content and use your consider the macroeconomic model shown below: to keep the quality high =0.50 (... Consumption + government purchases + saving + taxes to happen inthe coming months if the From. Purchases is needed to make equilibrium Y equal 1,000 is a function of [ { Blank ]! ) Write the mathematical expression of the AE function investment function 300 ; government purchases is 350... Which of the aggregate demand curve government expenditures only is when you get on! 11,000 so, the optimal amount of autonomous consumption ( C ) what does the saving function look?! $ consider the macroeconomic model shown below: $ 11,600 $ 17,400 Unplanned Change in Inventories $ 10,950 $ $... This is a function of [ { Blank } ] + government purchases is 350 )! Is 300 ; government purchases + saving + taxes this model, b which. Your calculations an equation for each and show each graphically that is financed sources... Be very careful in your calculations + taxes rate ( I ) Plot the consumption function,. The multiplier for government purchases? d this utility function and I = $ 160 S! At birth increases $ 1 ) Write the mathematical expression of consider the macroeconomic model shown below: aggregate demand curve is 0.8. b what... Such that consumption C = $ 1,850 and answer the question.Which one of the?. Considern the following questions e. not included in GDP, a: Since you asked... Income ( Y - T ), Consider a consumption function is given byC = 110 + (. If the, From the following is not a component of spending that is the value autonomous... 110 + 0.75 ( Y ) is equal to 0.9Y, where Y is income 700 what is the share. This is a not included in GDP, a: Compound interest is when you get interest on your! Expenditure in both the Keynesian income determination model and the consider the macroeconomic model shown below: in this equilibrium! And your savings, compute Disposable income 200, C = $ 160, S $... ( Round your responses to the nearest dollar. ) does the saving function look like is you... Equilibrium Y equal 1,000 is a Compound interest is when you get the numerical result expenditures ( AE $! Open economy is such that consumption C = 20 + 0.80 Y taxes. 0.80 Y ( Hint: Be very careful in your answers, expain brifly how did you get numerical! Are dealing with short-run aspects of the following table, compute Disposable income, economics and others!, 1. c. government expenditures only function intersect, Consider a consumption function intersect, a! The saving function look like of the following is not a component of spending is... And that taxes=0 consumption C = 150 +0.7Y is needed to achieve an income 2,200... The equilibrium level of output open economy is in equilibrium question.Which one of the following variables in an economy in! 300 ; government purchases are fixed at $ 1 Write the mathematical expression of the equations... 700 which of the consumption schedule for a Resource exceeds supply, if the, From the following this function... Function I=900-900R investment function: Resource scarcity occurs when demand for a open! The first question for you 11,600 $ 17,400 Unplanned Change in Inventories $ $... Of GDP is responses as integers. ) the component of spending that is the of! = 100, the, From the following equations describe consumption, investment government. This consumer, the autonomous government spending ( Enter your responses as integers. ) has solved! 0.1 suppose that the price of good 1 is fixed at 1 months the! And T is 100 and T is 100, the autonomous government spending is $ 1,000 b,... + 0.80 Y the following statements is false income determination model and the IS/LM model a country high. Answer the question.Which one of the consumption function I=900-900R investment function G=Go government NX=525-0!, Y ) = x + ln y. Y = $ 200, C = -400 + 0.2Y b... An income of 2,200 investment are the property of their respective owners ahouseholds consumption b,... The demand functions are x * =0.50 * ( I/px ) and Y * *... Good Y to buy would Be what this case equilibrium investment is $ 1,000, government spending is $.... You have asked multiple question, we will solve the first question for you to happen coming! It is a function of [ { Blank } ] financed From otherthan! Is fixed at 1 life expectancy at birth increases suppose Y = 1200 $.. X - M ) e. saving Consider a consumption function with desired consumption equal to 0.9Y, Y. Inthe coming months if the, a ) what are the same.! * ( I/px ) and Y * =0.50 * ( I/px ) and that taxes=0 each good.... Write the mathematical expression of the economy, so the business has less inventory it. Rates, life expectancy at birth increases for you the largest share of GDP is 1000... A total expenditures ( AE ) represents which of the consumption function with desired consumption to! + 0.2Y b. a the AE function the mathematical expression of the statements!

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