Consider an economy described by the following: An expression for the IS curve is: A. Y=59-0.15r. B. Y=59-4r. C = 7= G= T= NX = $5 trillion $1.5 trillion $2 trillion $4 trillion $1 trillion CID 7=0 mpc = 0.9 d = 0.15 x = 0.25 OC. Y 47.0-0.15r. OD. Y=47.0-4r. Assume that the Federal Reserve controls the interest rate and sets the interest rate at r= 3.0. The equilibrium level of output is $ 47 trillion. (Round your response to one dec Suppose that a financial crisis begins, and fincreases to f=3. The new equilibrium output and is equal to $ trillion. (Round your response to one decima

Consider an economy described by the following: An expression for the IS curve is: A. Y=59-0.15r. B. Y=59-4r. C = 7= G= T= NX = $5 trillion $1.5 trillion $2 trillion $4 trillion $1 trillion CID 7=0 mpc = 0.9 d = 0.15 x = 0.25 OC. Y 47.0-0.15r. OD. Y=47.0-4r. Assume that the Federal Reserve controls the interest rate and sets the interest rate at r= 3.0. The equilibrium level of output is $ 47 trillion. (Round your response to one dec Suppose that a financial crisis begins, and fincreases to f=3. The new equilibrium output and is equal to $ trillion. (Round your response to one decima

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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Given the following information about each economy, either calculate the missing variable or determine that it cannot be calculated: Instructions: Enter your answer as a whole number. If you are entering a negative number be sure to include a negative sign (-) in front of that number. a. Suppose C = $20.1 billion, 1 = $3.5 billion, G = $5.2 billion, and NX = $-1 billion. Total income is (Click to select) ✓ b. Suppose total income is $1.3 trillion, G = $0.6 trillion, and C = $0.8 trillion. I is (Click to select) く c. Suppose total expenditure is $679 billion, C = $441 billion, I = $125 billion, and G = $83 billion. NX is: $ billion. Exports (Click to select) ✓
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).
Draw expenditure graph with information below C=360+0.6Y I=200million G=150million
An economy is described by the following equations:Expenditure Sector: Money Sector:S = - 200 + (1/5)YD Ms = 400TA = (1/8)Y - 40 Md = (1/4)Y + 100 - 5iTR = 60I = 300 – 10iG = 70 NX = 150 - (1/5)YHere S is saving; TA is taxes; TR is transfers; I is investment; G is government spending; NX is net exports; Ms is money supply; and Md is money demand.a) Find the IS and LM equations for this economy. Draw those equations in an IS-LM framework.b) Find the equilibrium level of output and interest rates. Calculate also the equilibrium values of investment (I), net exports (NX), and money demand (md)
Which of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.
Problem 1: Suppose the current price level is 105, and the current level of RGDP is $17.2 trillion. Illustrate each of the following situations on a graph. a. The price level rises to 110, while other variables remain constant. b. Firms become pessimistic and reduce their investment. Assume that the price level remains constant. Problem 2: Briefly explain whether you agree or disagree with the following statement: "Real GDP is currently $17.2 trillion, and potential GDP is $17.4 trillion. If the president would increase government purchases by $200 billion or cut taxes by $200 billion, the economy could be brought to the equilibrium at potential GDP."
The following equations describe an economy. Y=C+I+G C=120+0.6(Y-T) I=100-10r, G=60 T=40 M/P=Y-20r. M=600 P=20 a. Derive the equations for IS and LM curves. b. Find the equilibrium level of income and the equilibrium interest rate. c. Suppose government expenditure increases by 50%. Find the equilibrium interest rate and income.
Consider an economy described by the following: C= $3.15 trillion 1 = $1.2 trillion G= $2.8 trillion T= $3 trillion f=0.5 mpc=0.8 d=0.2 x=0.2 NX = $-0.5 trillion The simplified expression for the consumption function is: O C= 3.15+(1-0.8)Y O C=0.75+(1-0.8)Y O C=3.15+0.8Y O C=0.75+0.8Y
Consider an economy described by the following: Ć The expression for the MP curve is: O A. r=3+0.75. B. r= 1.5 +1.5. c. r= 3 + 1.5. O D. r= 1.5 +0.75. = $3.5 trillion i = NX = $1.3 trillion G = $3.5 trillion T = $3 trillion $1 trillion f = = 1 mpc = 0.75 d = 0.3 X = 0.2 λ = 1.5 r = 1.5
Due to some negative news concerning the impact of global warming on the economy, consumers are becoming more pessimistic about the future to the point of reducing autonomous consumption by 50. What is the immediate impact on income before the economy adjusts to its new equilibrium? What are the economy’s equilibrium level of output Y and interest rate r following the fall in autonomous consumption? Compute the equilibrium level of consumption and investment spending. With the help of the IS/LM graph, carefully explain what happens to the economy following the fall in consumer confidence.
In a simple economy (assume there are no taxes, thus Y is disposable income), the consumption function is C= 100 +0.75Y Investment is equal to 400. In this economy, equilibrium GDP is $ (Round your answer to the nearest dollar) 1.) Using the point drawing tool, on the graph to the right, indicate the real GDP point that you found above Label the point 'E' 2) Using the line drawing tool, carefully graph the consumption plus investment line Properly label your line Carefully follow the instructions above, and only draw the required objects
What is the geometric meaning of the MPC?