Question

Suppose you are developing a Keynesian Cross Model with the following information:

C = 220+(0.75(Y-T), Planned Investment I = 500, G = T= 500

a.

Please find out the equilibrium income.

b.

Please find out what is the consumption at the equilibrium level.

c.

Please graph the Keynesian Model to locate the equilibrium between the income and

expenditure.

d.

What level of government purchase is required to achieve an income level of $ 3700?

e.

What is the mpc for the planned expenditure curve? (or this economy)

f.

Instead of increasing the government purchase, if the government likes to change the tax,

what level of taxes is required to see the economy’s income at 3700?

g.

What is the tax multiplier for this economy

Suppose you are developing a Keynesian Cross Model with the following information:

C = 220+(0.75(Y-T), Planned Investment I = 500, G = T= 500

a.

Please find out the equilibrium income.

b.

Please find out what is the consumption at the equilibrium level.

c.

Please graph the Keynesian Model to locate the equilibrium between the income and

expenditure.

d.

What level of government purchase is required to achieve an income level of $ 3700?

e.

What is the mpc for the planned expenditure curve? (or this economy)

f.

Instead of increasing the government purchase, if the government likes to change the tax,

what level of taxes is required to see the economy’s income at 3700?

g.

What is the tax multiplier for this economy

Answer #1

In the Keynesian cross model, assume that the consumption
function is given by C=120+0.8(Y−T).
Planned investment is 200; government purchases and taxes are
both 400. Y, C, I G&T are all in billions.
1. Graph planned expenditure as a function of income.
2. What is equilibrium income?
3. If government purchases increase to 420, what is the new
equilibrium income? What is the multiplier for government
purchases?
4. What level of government purchases is needed to achieve an
income of...

1) In the Keynesian cross, assume that the consumption function
is given by
C=200+0.75 (Y-T)
Planned investment is 100; government purchases and taxes are
both 100.
Graph planned expenditure as a function of income.
What is the equilibrium level of income?
If government purchases increase to 125 (goes up by 25), what
is the new equilibrium income?

Consider the following Keynesian-cross model of an economy:
Consider the following Keynesian-cross model of an economy:
C = 170 + 0.6 ( Y − T )
I = 250
G = 300
T = 200
By how much would government purchases have to increase in order
to increase the equilibrium level of income by 50?
By how much would government purchases have to increase in order
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1. In the Keynesian cross, assume that the consumption function
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a. Graph planned expenditure as a fraction of income.
b. What is the equilibrium level of income?
c. If government purchases increase to $65, what is the new
equilibrium income?
d. What level of government purchases is needed to achieve an
income of 1160? Assume taxes remain at $50.
e. What level of taxes is...

1. In the Keynesian cross, assume that the consumption function
is given by: C=$85+0.7(Y−T). Planned investment is $200, government
purchases and taxes are both $50.
a. Graph planned expenditure as a fraction of income.
b. What is the equilibrium level of income?
c. If government purchases increase to $65, what is the new
equilibrium income?
d. What level of government purchases is needed to achieve an
income of 1160? Assume taxes remain at $50.
e. What level of taxes is...

In a closed economy, the consumption function is:
c = 1.15 + 0.75(y - t) billions of 1992 dollars.
The tax function is:
t = 0.1y + 0.1 billions of 1992 dollars.
Planned investment is $1 billion and planned government
expenditures
are $1.5 billion. Calculate:
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2. Consumer expenditure
3. Saving
4. The investment multiplier
5. The government budget deficit
6. The leakages from and injections into the circular flow of
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Consider a closed economy to which the Keynesian-cross analysis
applies. Consumption is given by the equation C = 200 + MPC(Y – T).
Planned investment (I) is 300, government spending (G) is 300 and
taxes (T) is 300. Assume MPC is equal to 2/3.
(a) If Y is 1,500, what is planned spending? What is inventory
accumulation or decumulation? Is equilibrium Y higher or lower than
1,500?
(b) What is equilibrium Y?
(1 mark)
(c) What are equilibrium consumption, private...

An economy is described by the following equations:
C = 100 + 0.75(Y – T)
IP = 50
G = 150
NX = 20
T = 40
What is the marginal propensity to consume (MPC) in this
economy?
Find the autonomous expenditure (the part of PAE that does not
depend on Y)
What is the equilibrium level of output?
Assume that the economy is NOT in equilibrium, and the level of
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You are given the following income-expenditures model
for an economy :
Consumption C = 300 + .64Yd
Tax (T) = $60
Government expenditure G = $100
Investment (I) = $120
From above data calculate the follows:
Equilibrium level of income
At the equilibrium level of income, what is the amount
of consumption?
At the equilibrium level of income, what is the amount
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Marginal Propensity of Saving (MPS)
Tax multiplier in this economy?
Budget deficit
Unplanned inventory

In the Keynesian Model assume the following information:
C=1000+0.5Yd I=300 G=200 T=100 here Yd=Y-T. Note that I, G, T,
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1200 how does the economy adjust to equilibrium, specifically
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by 150, by how much the...

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