Question

An economy has government purchase of $20, and level of output of $100, it also has...

  1. An economy has government purchase of $20, and level of output of $100, it also has consumption and savings as follows:

C=200r+20

S=100r+45

(each question is separate and do not build on each other)

  1. What is the equilibrium interest rate and saving/investment?
  2. If government purchase increase to $40, what is the equilibrium interest rate and saving/investment?
  3. If level of output decreases to $80, what is the equilibrium interest rate and saving/investment?
  4. If there is a positive saving shock leading to a new saving function S=100r+35, what is the equilibrium interest rate and saving/investment?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Please upvote if i'm able to help you it means a lot

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1. An economy has full-employment output of 5000. Government purchases are 1000. Desired consumption and desired...
1. An economy has full-employment output of 5000. Government purchases are 1000. Desired consumption and desired investment are given by Cd= 3600 - 2000r + 0.10Y Id = 1200 - 4000r where Y is output and r is the expected real interest rate. (a) Find the real interest rate that clears the goods market. Assume that output equals full-employment output. (b) Calculate the amount of saving, investment, and consumption in equilibrium.
1. Suppose an economy is described by the consumption function C=1,100+.8(Y-T), I= 2,000-200r, T=1,000, G=1,300, Y=15,000....
1. Suppose an economy is described by the consumption function C=1,100+.8(Y-T), I= 2,000-200r, T=1,000, G=1,300, Y=15,000. What is the equilibrium real interest rate? 2. Consider the following data for a closed economy: Y = $20 trillion C = $12 trillion T = $6 trillion Spublic = $2 trillion A. What is the level of private savings for this economy? B. What is the level of Government Purchases for this economy? C. What is the level of investment for this economy?
Consider an economy with no international trade, no government spending and no taxes, whose consumption function...
Consider an economy with no international trade, no government spending and no taxes, whose consumption function and investment function are given by the following equations: C = 100,000 + .92Y I = 40,000 a. What is the equilibrium level of aggregate output for this economy? b. What is the saving function for this economy? c. Check the solution, as we did in class, by showing that at the equilibrium level of Y total spending exactly matches the level of output....
5) The economy has an aggregate production function fN=15N-12N2 , where N is labor input. Labor...
5) The economy has an aggregate production function fN=15N-12N2 , where N is labor input. Labor supply is given by NsWP=-5+3WP , where W is the money wage and P is the price level. Desired consumption depends on real income, Y, and can be written as CdY=10+0.7Y . Given real interest rate, r, the desired investment is Idr=30-200r . The real money demand is characterized by LY,r=10+Y-200r . Government spending, G, and nominal money stock, M, is given as G=0...
3. Suppose that the expected future marginal product of capital is MPKf = 20 – 0.02K,...
3. Suppose that the expected future marginal product of capital is MPKf = 20 – 0.02K, where K is the future capital stock. The depreciation rate of capital, d, is 20% per period. The current capital stock is 900 units of capital. The price of a unit of capital is 1 unit of output. Firms pay taxes equal to 50% of their output. The consumption function in the economy is C= 100 + 0.5Y-200r, where C is consumption, Y is...
Consumption function: C= 12 + 0.6(YD) Government spending: G= 20, Investment function: I= 25-50r, Tax collections:T=20,...
Consumption function: C= 12 + 0.6(YD) Government spending: G= 20, Investment function: I= 25-50r, Tax collections:T=20, Domestic price level: P = 2, Nominal money supply: MS= 360, Real Money Demand: L(r,Y)=2Y-200r, Production function: Y=N, Labor supply: N=100 (a) Find an expression for the IS curve. Y = C + I + G + NX since there is no foreign sector in the above question, NX = 0. The equation becomes: Y = C + I G Y = 12 +...
When the economy is producing at an output level below the potential output, the unemployment rate...
When the economy is producing at an output level below the potential output, the unemployment rate is above the natural rate of unemployment. the short-run aggregate supply curve will slowly shift to the left when wages start to adjust. the intersection of the short-run aggregate supply curve and the aggregate demand curve is to the right of the long-run aggregate supply curve. the economy might be at the long-run equilibrium. Which of the following is not a determinant of the...
If the economy is close to full employment, an increase in government purchase (G) will __________...
If the economy is close to full employment, an increase in government purchase (G) will __________ in the long run. a) reduce all of consumption, net exports and investment through the wealth, interest rate and international trade effects b) reduce both consumption and investment through the wealth and interest rate effects c) reduce only net exports through the international trade effect reduce only investment through the interest rate effect d) reduce only consumption through the wealth and interest rate effects
Consider the following competetive economy K=150 L=150 Production Function= Y=K^.4L^.6 Consumption Function . C=10+.7Yd I= 40-100R,...
Consider the following competetive economy K=150 L=150 Production Function= Y=K^.4L^.6 Consumption Function . C=10+.7Yd I= 40-100R, G=30, T=30 .... MPL= .6K^.4L^-.4 MPK= .4K ^-.6L^.6 Suppose the government increased spending to G = 32 (holding taxes constant T=30). Compute the new value for government saving (Sg) and national savings (S), and use the investment function to calculate the new interest rate (r). Graphically illustrate the impact of increase in government expenditure on the Loanable Funds Market and the Goods Market. (Please...
The country, Hoosier (a closed economy), has the following data: GDP = 12,000, Consumption = 7,000,...
The country, Hoosier (a closed economy), has the following data: GDP = 12,000, Consumption = 7,000, Taxes = 3,000, Government purchases = 4,000. The investment is I = 4,000 – 1,000 r (where r is the real interest rate, for example r = 5%, use r = 5.) a. What is the supply equation? b. What is the demand equation? c. What is the equilibrium interest rate, r, and what are national saving and investment, S and I?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT