Question

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 equilibrium aggregate output (RGDP). You need to show your work of estimations.

Answer #1

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...

49. Disposable Income (YD) Consumption (C) $ 200 400 600 800
1,000 150 300 450 600 750 900 The algebraic form of this
consumption function is: C = $150 + 0.75(Yd). C = $200 + 0.8(Yd). C
= $200 + 0.75(Yd). C = $150 + 0.8(Yd).

4. Suppose that consumption C is the following function of
disposable income YD C = 200 + 0:8YD (a) What are the marginal
propensities to consume and save (MPC and MPS)? (b) Graph the
consumption function and the 45 degree line. (c) Solve for saving
or dissaving at levels of disposable income 300, 900, and 1300. (d)
Find the level of disposable income where savings equals zero.

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 A country the consumption function is: C (Y) = 5 +
0.75 Y
The investments are I = 4;
full employment income is YV = 40.
a) How high must government expenditure be for full employment
to be achieved?
b) How high would government transfers to A-land citizens have to
be to achieve the same goal? (Note: a transfer is like a negative
tax, -T)
c) Why is it that the state expenditure is higher for b) than for...

GDP computations.
Consumption = C, Taxes = T, Investment Demand = ID,
Disposable Income = Y-T, Govt. Purchases of Goods and Services = G
Aggregate Expenditure = AE, the MPC is constant, Foreign trade is
zero. In case you care, autonomous consumption = $10.
AS = Y
T
Y-T
C
ID
G
X-Im
AE
d(Invt.)
$1,800
$200
$1,210
$500
$200
$10
$2,000
$200
$1,360
$500
$200
$10
$2,200
$200
$500
$200
$10
$2,400
$200
$500
$200
$10
$2,600
$200
$500...

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...

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...

Disposable
Income
Yd
Consumption
C
$2,000
$2,040
2,100
2,120
2,200
2,200
2,300
2,280
2,400
2,360
Using the table provided calculate the following for each level
of disposable income:
Change in disposable income
Change in consumption
Saving
Change in saving
MPC
MPS
The multiplier
Show your work if possible. I suggest that you build a
table containing the information requested. This question is worth
7 points. All other questions are worth one point
each.
2. The classical economists believed __________ determined...

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