Question

Use the following macroeconomic model to answer the questions from. You must show your work of estimation to obtain the credits.

C = 50 + 0.80Yd; C = consumption function; Yd = disposable income (Y-T)

T = 30; T = Tax revenue

I = 100; I = Investment

G = 150; G = Government expenditure

Yf = Full Employment RGDP (Potential RGDP) = 1600

1. Estimate the equilibrium GDP level (income).

2. At the equilibrium level of output you estimated for Q1 above, estimate the aggregate consumption level

3. At the equilibrium level of output you estimated for Q1 above, estimate the aggregate saving level.

Answer #1

Solution:

Use the following macroeconomic model structure to answer the
questions followed. Please note that you must show your work of
estimations for these numerical multiple-choice questions for
gradable credit. Without showing your works of estimation, your
answers won’t be credible for take-home exam. 8 pts
C = 300 + 0.8Yd; C = consumption function; Yd (Y-T) = disposable
income I = 200; I = Investment
G = 400; G = Government expenditure
T = 200; T = Tax revenue
Also...

C = 50 + 0.80Yd; C = consumption function; Yd = disposable
income (Y-T)
T = 30; T = Tax revenue I = 100;
I = Investment G = 150;
G = Government expenditure
Yf = Full Employment RGDP (Potential RGDP) = 1600
14. Using the value of MPC = 0.75, and knowing the difference
between the values of expenditure multiplier and the tax
multiplier, with reduction of taxes by $300 billion (other things
staying the same), estimate increased level...

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...

Income
(Yd)
Consumption
Expenditure
Saving
Investment
Expenditure
Government
Expenditure
Net Export
Expenditure
Aggregate
Expenditure
$8000
$11,000
$2,500
$5,000
$12,500
12,000
14,000
2,500
5,000
12,500
20,000
20,000
2,500
5,000
12,500
30,000
27,500
2,500
5,000
12,500
50,000
42,500
2,500
5,000
12,500
100,000
80,000
2,500
5,000
12,500
Calculate savings, MPC, MPS, break even income, and the
equilibrium level of income (Y = AE = C + I + G +NX) in the above
given information.
Draw a graph showing disposable income (Yd)...

Income
(Yd)
Consumption
Expenditure
Saving
Investment
Expenditure
Government
Expenditure
Net Export
Expenditure
Aggregate
Expenditure
$8000
$11,000
$2,500
$5,000
$12,500
12,000
14,000
2,500
5,000
12,500
20,000
20,000
2,500
5,000
12,500
30,000
27,500
2,500
5,000
12,500
50,000
42,500
2,500
5,000
12,500
100,000
80,000
2,500
5,000
12,500
1.Calculate savings, autonomous consumption, MPC, MPS, break
even income, and the equilibrium level of income (Y = AE = C + I +
G + NX) in the above given information.
2. Draw a graph...

This assignment is due by Monday, October 12 by
11:59pm.
Income
(Yd)
Consumption
Expenditure
(C)
Saving
(S)
Investment
Expenditure
(I)
Government
Expenditure
(G)
Net Export
Expenditure
(NX)
Aggregate
Expenditure
(AE)
$8000
$11,000
$2,500
$5,000
$12,500
12,000
14,000
2,500
5,000
12,500
20,000
20,000
2,500
5,000
12,500
30,000
27,500
2,500
5,000
12,500
50,000
42,500
2,500
5,000
12,500
100,000
80,000
2,500
5,000
12,500
From the above given information calculate savings, MPC, MPS,
Multiplier, and the equilibrium level of income (Y = AE...

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,
represents private investment, Government spending and Taxes,
respectively. What are: (i) the total injections and (ii) total
leakages What is the equilibrium level of income, consumption, and
saving and disposable income Assume that the level of output is
1200 how does the economy adjust to equilibrium, specifically
mention inventory levels. Suppose private investment will decrease
by 150, by how much the...

Suppose the following aggregate expenditure model describes the
US economy:
C = 1 + (8/9)Yd T = (1/4)Y I = 2 G = 4 X = 3 IM = (1/3)Y where C
is consumption, Yd is disposable income, T is taxes, Y is national
income, I is investment, G is government spending, X is exports,
and IM is imports, all in trillions $US.
(a) Derive a numerical expression for aggregate expenditure (AE)
as a function of Y. Calculate the equilibrium...

1. Suppose the United States economy is represented by the
following equations: Z= C + I + G , C = 500 + 0.5Yd, Yd = Y − T T =
600, I = 300, G = 2000, Where, Z is demand for goods and services,
Yd is disposable income, T is taxes, I is investment and G is
government spending. Y is income/production. (a) Assume that the
economy is in equilibrium. What does it mean in terms of the...

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
of savings?
Marginal Propensity of Saving (MPS)
Tax multiplier in this economy?
Budget deficit
Unplanned inventory

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