Question

Consider an economy which is given by the following: ? = 8 0 + 3/4 ?...

Consider an economy which is given by the following:

? = 8 0 + 3/4 ? ?

? = 60
?? = 0.05??

? = 49

? = 20

?? = 20

  1. (i) Calculate the equilibrium level of real GDP for this economy. What is the size of the government deficit? What is the size of the current account balance?

  2. (ii) If government spending increase to 75, what happens to equilibrium output and imports?

  3. (iii) Supposeaquotaisimposedwhichlimitsimportsto 25. How do your answers to parts (i) and (ii) change with this quota?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

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
An open economy is described by the following system of macroeconomic equations, in which all macroeconomic...
An open economy is described by the following system of macroeconomic equations, in which all macroeconomic aggregates are measured in billions of Namibian dollars, N$. Y = C + I + G + X – M C = 160 + 0.6Yd T = 150 + 0.25Y I = 150 G = 150 E = 300 M = 50 + 0.1Y, Yf = 1500 Where: Y is domestic income Yd is private disposable income C is aggregate consumption spending T is...
Consider an economy with a corn producer, some consumers, and a government. In a given year,...
Consider an economy with a corn producer, some consumers, and a government. In a given year, the corn producer grows 30 million bushels of corn and the market price for corn is $5 per bushel. Of the 30 million bushels produced, 20 million are sold to consumers, 5 million are stored in inventory, and 5 million are sold to the government to feed the army. The corn producer pays $60 million in wages to consumers and $20 million in taxes...
Consider the following model of an open economy: C = 14000 + 0.9YD - 45000i YD...
Consider the following model of an open economy: C = 14000 + 0.9YD - 45000i YD = Y - T I = 7000 - 20000i M = 0 G = 7800 X = 1800 where Y is income, C is consumption, YD is disposable income, i is the real interest rate,G is government spending, T is tax, I is investment, M is imports, and X is exports. What is the marginal propensity to save? (1 MARK) Explain the intuition behind...
Suppose that the behavior of households, firms and the government in an economy is determined by...
Suppose that the behavior of households, firms and the government in an economy is determined by the following equations: C=30+0.75Yd II = 15 G = 10 T=30 TR=10 The full employment level of output in the economy is: YFE = 300 i. Find an expression for aggregate demand (This should take the form of AD = a + bY, where a and b are numbers): ii. What is the equilibrium level of output? YE = iii. If, for some reason,...
3. The components of planned aggregate spending in a certain economy are given by Consumption Function:...
3. The components of planned aggregate spending in a certain economy are given by Consumption Function: C = 800 + 0.75(Y - T) – 2000r Planned Investment: Ip = 400–3000r Government Revenue and Spending: T = 300 and G = 450 Net Export: NX = 75 where r is the real interest rate (For example, r = 0.01 means that the real interest rate is 1 percent). (1) Find the level of public saving. (2) Suppose that the real interest...
The components of planned aggregate spending in a certain economy are given by Consumption Function: C...
The components of planned aggregate spending in a certain economy are given by Consumption Function: C = 800 + 0.75(Y - T) – 2000r Planned Investment: I p = 400–3000r Government Revenue and Spending: T = 300 and G = 450 Net Export: NX = 75 where r is the real interest rate (For example, r = 0.01 means that the real interest rate is 1 percent). (1) Find the level of public saving. (2) Suppose that the real interest...
Fast forward 50 years and Melvis Pink today boasts of a modern and expanding economy dependent...
Fast forward 50 years and Melvis Pink today boasts of a modern and expanding economy dependent on its exports of crude and natural gas. Its national income in 2013 was driven by the following indicators (all information is expressed in billions of dollars): Autonomous consumption $50, investment $40, government expenditure $50, autonomous taxes $10, exports $60, imports $40. A welfare state, the federal government handed out $20 billion in transfer payments in 2018. The marginal propensity to consume is 0.6....
Economists in Fundlandia, a closed economy, have collected the following information about GDP and public savings...
Economists in Fundlandia, a closed economy, have collected the following information about GDP and public savings in their country: Y = 1000 G = 100 T = 100 They further estimate that national savings and investment are governed by the following expressions: S = 150 + 50*r I = 600 - 100*r Where r is the country's real interest rate in % terms (thus if you find r = 5, then r is 5%). Problem Set #2 - Part II...
3. The IS-LM Model Consider an economy characterized by the following equations for consumption (C), investment...
3. The IS-LM Model Consider an economy characterized by the following equations for consumption (C), investment (I), government spending (G), taxes (T), aggregate demand (Z), output (Y), and the interest rate (i): C = 54 + 0.3*(Y – T) I = 16 + 0.1*Y – 300*i G = 35 T = 30 Z = C + I + G i = ? Suppose the central bank has set the interest rate equal to 2% (this is, ? = 0.02). a)...
3. The IS-LM Model Consider an economy characterized by the following equations for consumption (C), investment...
3. The IS-LM Model Consider an economy characterized by the following equations for consumption (C), investment (I), government spending (G), taxes (T), aggregate demand (Z), output (Y), and the interest rate (i): C = 54 + 0.3*(Y – T) I = 16 + 0.1*Y – 300*i G = 35 T = 30 Z = C + I + G i = ? Suppose the central bank has set the interest rate equal to 2% (this is, ? = 0.02). a)...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT