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- 3) In the macroeconomic model below, Y is aggregate output, C is aggregate consump- tion, Io is aggregate investment, Go is government spending, T is the total amount of taxes collected by the government, and t is income tax rate. The variables Y, C, and I are endogenous, Go, Io, and t are exogenous, and a, b, and k are parameters. Y=C+ Io + Go C=a+b(Y-T) T=k+tY (a > 0,6€ (0,1)) (k>0, t€ (0,1)) Calculate the determinant of the coefficient matrix A associated with this system of equations. The determinant of the coefficient matrix A is: 1-b.+ bt a) A b) A-1-b-bt + a c) |A|=b+t d) A1+a+b-t e) |A| =Go+b+t f) A-Io-b+t 8) A = Go + Io +b-t3) In the macroeconomic model below, Y is aggregate output, C is aggregate consump- tion, Io is aggregate investment, Go is government spending, T is the total amount of taxes collected by the government, and t is income tax rate. The variables Y, C, and I are endogenous, Go, Io, and t are exogenous, and a, b, and k are parameters. Y = C + Io + Go C = a + b(YT) T=k+tY (a > 0, b = (0, 1)) (k > 0, t = (0, 1)) Calculate the determinant of the coefficient matrix A associated with this system of equations. The determinant of the coefficient matrix A is: a) |A| = 1-b+ bt b) |A| = 1-b-bt + a c) |A| = b + t d) |A| = 1+ a + b - t e) |A| = Go +b+t f) A = Iob+t g) A = Go + Io +b-t1.Draw Aggregate Demand, Short Run Aggregate Supply, and Long Run Aggregate Supply as if an economy is in both short run and long run equilibrium. 2. Suppose the price of oil (an input in the production of many goods) decreases. Show how this will affect the model starting from (1) above. What happens to GDP, The Price Level, and Potential Output? Is the economy in a recessionary gap or an inflationary gap? 3. Suppose that consumers feel confident about their futures. Show how this will affect the model starting from (1) above. What happens to GDP, The Price Level, and Potential Output? Is the economy in a recessionary gap or an inflationary gap? 4. Explain in detail and show graphically how the economy will naturally (No government or central bank intervention) return to long run equilibrium after the event from (3) above (don’t consider the event from part 2; only 1 and 3 are relevant to this question) . (the numbers are the numbers of the question from example in question 3 the 1…
- (2) Imagine that you operate an economic forecasting firm. Your stock in trade is that you know the true model of the economy where you work. Assume the following is a description of this economy. Y = C+1+G+ NX. ... C = a + bY. ... 1 = k + gY- hR... G = Go.... NX = n- mY- sR.... ..... (Income identity) (Consumption) .... (Investment) (Government) (Net export) .......... .....*** Y is aggregate real output and R is interest rate. (a)Briefly explain why the investment function is directly related to aggregate real output and inversely related to interest rate. (b)Suppose for this economy the values of the parameters and independent variables are as follows, a = 250, b = 0.55, k = 150, g 0.10, h = 500, Go = 350, n 50, m = 0.05, s 500, R= 5% find the value of aggregate real output Y and the multiplier. %3D %3D %3D %3D %3D %3D %3D %3D (c) Suppose the government financed its budget deficit by borrowing additional 100 from the credit market, by how much will this new spending change the…Question 5 Use the Aggregate supply and Aggregate Demand Model below to answer the questions that follow. i) Examine the influence of government expenditure on investment in a nation. Use Jot Inc. Ltd a multinational construction company in which you are the Chief Exec of the firm that that is highly diversified and recieves funds to construct highways and other government funded projects. Also, explain the factors that cause the Aggregate Demand curve to be downward sloping left to right.Please answer question 4 1.Draw Aggregate Demand, Short Run Aggregate Supply, and Long Run Aggregate Supply as if an economy is in both short run and long run equilibrium. 2. Suppose the price of oil (an input in the production of many goods) decreases. Show how this will affect the model starting from (1) above. What happens to GDP, The Price Level, and Potential Output? Is the economy in a recessionary gap or an inflationary gap? 3. Suppose that consumers feel confident about their futures. Show how this will affect the model starting from (1) above. What happens to GDP, The Price Level, and Potential Output? Is the economy in a recessionary gap or an inflationary gap? 4. Explain in detail and show graphically how the economy will naturally (No government or central bank intervention) return to long run equilibrium after the event from (3) above (don’t consider the event from part 2; only 1 and 3 are relevant to this question) . (the numbers are the numbers of the question from…
- Use the Aggregate supply and Aggregate Demand Model below to answer the questions that follow.Aggregate Supply and Aggregate Demand Model 1. Examine the influence of government expenditure on investment in a nation. Use Jot Inc. Ltd a multinational construction company in which you are the Chief Exec of the firm that that is highly diversified and recieves funds to construct highways and other government funded projects. Also, explain the factors that cause the Aggregate Demand curve to be downward sloping left to rightQuestion 1. Explain why the Aggregate Demand curve is downward sloping . 2. Explain why the Aggregate Supply curve is upward sloping . 3. What determines potential output Yf, and how can the economy exceed Yf in the short run? 4. Explain the Equilibrium condition of Aggregate Expenditure= output Y. How are inventory changes related to AE and Y? 5. Define the multiplier and the marginal propensities to consume (MPC) and save (MPS). What is the relationship between the MPC and the multiplier? 6. Compare and contrast the short run Keynesian and long run Neoclassical views of the aggregate supply and Phillips curves 7. For each the following economies, calculate equilibrium Y*, the multiplier, and the size of the recessionary or inflationary gap, if any. a. AE= 250 +.75 Y Yf= 1200 b. AE= 400+ .9 Y Yf= 3000 c. AE= 300 +. 8Y Yf=1500 d. AE= 300+ .67 Y Yf=1000(2) Imagine that you operate an economic forecasting firm. Your stock in trade is that you know the true model of the economy where you work. Assume the following is a description of this economy. Y = C+1+G+ NX.... C = a + bY. ... | =k + gY-hR... G= Go... NX = n-mY- sR.. . .. (Income identity) . (Consumption) .. (Investment) ..(Government) ... (Net export) %3D Y is aggregate real output and R is interest rate. (a)Briefly explain why the investment function is directly related to aggregate real output and inversely related to interest rate. (b)Suppose for this economy the values of the parameters and independent variables are as follows, a = 250, b = 0.55, k = 150, g = 0.10, h = 500, Go = 350, n = 50, m = 0.05, s = 500, R= 5% find the value of aggregate real output Y and the multiplier. %3D %3D %3D %3D %3D
- Economics Question1) Use an aggregate demand (AD) and aggregate supply (AS) model for each question to respond to the following questions. Explain your answers. (a) Under what conditions does a reduction in Aggregate Demand benefit the economy? (b) Show how stagflation impacts the economy in the short-run.You will use the aggregate demand and supply model to analyze the economy. a. Draw the Aggregate Demand (AD), the Short-Run Aggregate Supply curves (SRAS) in one diagram. Make sure you label the axis and each line. Call the initial equilibrium Y1, P1. b. We observe an increase in aggregate demand. Illustrate this increase in your graph. Call the new equilibrium Y2, P2 can you please make the graph Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.