1. Suppose consumption C = 50 + 0.80 (YD), Government Purchases G 50, Export X= 20, inflation rate is 2.5%. The net tax rate, t = import, m = 0.2. What level of Investment is needed to achieve a target equilibrium %3D 0.25. The marginal propensity to income of 400? 2. Suppose GDP in a closed economy is equal to $100 million, Consumption is $50 million and the government's net tax rate is 10%. If we are told that the government has a budget deficit of $10 million, calculate government purchases
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- 1. Country X has following data: C = 20 + 0.8Y4, I = 30, G = 40, Tx = 20, T, = 15, X = 60, M = 20 + 0.04Y, incoming year growth target is 600, All figures is billion. Please calculate: a. National income equilibrium! b. Consumption and saving equilibrium! c. Government income from tax! d. How much change in government consumption if they want to achieve growth target?The data in columns 1 and 2 in the table below are for a private closed economy Instructions: For all parts, enter only whole numbers for your answers. If you are entering any negative values, be sure to include a negative sign (-) in front of the number you are entering. (1) Real Domestic Aggregate Output (Billions) $200 (6) Aggregate Expenditures, Exports Open Economy (Billions) (2) (5) Net (3) Expenditures Exports, (Billions) $20 $20 $20 (4) Imports, (Billions) $30 (Billions) (Billions) $240 $250 $300 $350 $280 $30 $320 $30 $360 $20 $30 $400 $400 $20 $30 $450 $440 $480 $520 $20 $30 S %24 $500 $550 $20 $20 $30 $30 a. Using columns 1 and 2, what is the equilibrium GDP for this hypothietical economy? $ billion b. Now open up this economy to international trade by Including the export and import figures of columns 3 and 4. Fill in columns 5 and 6 What is the equilibrium GDP for the open economy? $ billionQUESTION 2 Consider the closed-economy market-clearing model. Assume that the marginal propensity to consume is 0.8. Tax revenue decreases by $5 billion, while output and government spending remain the same (a) Calculate the dollar change in consumption. (b) Calculate the dollar change in national saving. (c) Does the equilibrium real interest rate increase, decrease, or stay the same? n toolhar nress ALT+F10 (PC) or ALT+FN+F10 (Mac).
- Imagine that the U.S. economy finds itself in the followingsituation:agovernmentbudgetdeficitof$100 billion, total domestic savings of $1,500 billion, and total domestic physical capital investment of $1,600 billion.Accordingtothenationalsavingandinvestment identity,whatwillbethecurrentaccountbalance?What willbethecurrentaccountbalanceifinvestmentrisesby $50billion,whilethebudgetdeficitandnationalsavings remain the same?Reductions in the personal income tax, often advocated by supply-siders to increase labor supply and effort, can be expected to also a. decrease consumption spending. b. increase export sales. c. increase consumption spending. d. decrease investment spending.Desired Aggregte Expendture Next question Reter to the graph to the right. A fal in the domestic prnce level private sector wealth This leads to a Desired Aggregate Expenditure and the Price Level in desired consumption, and shift in the AE curve. AEY Similarty, a roe in the domestic price level makes Canadan goods more expensive, resultingi aht in the shift in the AE curve net expont function, which causes AF Use the line drawing tool to show and label the effect of a fal in the domestic price level on the AE unction Camhuly follow the instructions above, and only draw the required object Real GOP
- Define the term Projected annual net savings?Autonomous Spending: $1,000 Invest2, 000 Government Spending: $3, 000 Exports: $500 C1: .55 Tax Rate: .22Marginal Propensity to Import: .09 If Investment drops by 20%, and if the government decides not to spend, whatwould the new tax rate have to change to in order to offset the drop in Y?Only typed answer Given the following for the economy of a country: Consumption function: C=90+0.75Yd. Investment function: I=75. Government spending: G=100. Net export: NX=50. Net taxes: T=50. Disposable income: YdY-T. Equilibrium: Y=C+I+G+NX. a. Solve for equilibrium income. Show your work below. b. If autonomous investment decreases by 60, what is the new level of income? Show your answer on the same graph. Show your work below. c. What is the value of the spending multiplier? Show your work below.
- | Assume in country Y, the average marginal propensity to save is 0.2. When the aggregate income is zero, consum- ers spend 50 to consume. Derive the saving function and consumption function for this country. What happens to consumption when the propensity to save decreases to 0.1? Explain your answer and show this on the graph.Problems Exercise 1 Suppose a closed economy is represented by the following equations: Z= C+I+G C= co + C1x YD YD = Y-T T=100 I=0.2x Y-5000x i G=150 where Cis private consumption, I is investment, i is the interest rate set by the central bank; G is government spending, Y is income, Ypis disposable income and T represents taxes. Assume that co =250, i=2% (remember 2%=0.02), and c1 = 0.6. а. i. Given the above equations and variables, calculate the equilibrium level of output. ii. What is the multiplier for this economy? b. Now, assume that I is 0.1× Y-5000× i. Also, assume that co, C1, G, i and T remain unchanged: i. What is the new equilibrium level of output? How much does income change as a result of the change in ? What is the multiplier for this economy after the change in ? ii. ii. iv. What is the new level of consumption after the change in ? c. Assuming the same change as in (b), but letting G, i and T vary, which policies can the government do to achieve the same level of…Economics PIODiem set is dde OIT AprTO 1. Let the following equations characterize the economy (note the addition of a tax rate on output): Y = 500 C = 60 + 0.8(Y-T) |= 30 - r G = 100 T = 0.4Y a) Calculate national saving, private saving, and public saving. b) Obtain the mathematical expression for the AD in this particular economy. Draw the graph. c) Determine the equilibrium interest rate (you can use the loanable funds market). Draw the graph for the lonable funds market. d) If Government spending increases to 120, what is the effect on income? Draw the new equilibrium in a graph (old and new in same graph).