Question

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 government needs to change government spending to prevent output from changing.

Answer #1

Answer:-

An economy is described by the following equations:
C = c0+ c1YD
YD= Y – T
I = b0+ b1Y
G = G (autonomous)
T = T (autonomous)
Suppose that consumers decide to consume less (and therefore
save more) for any given amount of disposable income. Specifically,
assume that consumer confidence (c1)falls. What will
happen to output, investment, public saving and consumption?

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...

The US economy is represented by the following equations:
Z=C+I+G, C=300+.5YD, YD =Y T T =400, I =250, G=1000 Given the above
variables, calculate the equilibrium level of output. Now assume
that consumer confidence increases causing a rise in autonomous
consumption (c0) from 300 to 500. What is the new equilibrium level
of output? How much does income change as a result of this event?
What is the multiplier for this economy?

In an open keynesian economy, the domestic households’
consumption Cpl = 100 + 0,75Yd, investment I = 400, the net tax
rate t = 0,2, government expenditure on goods and services G = 300,
exports X = 200, and the marginal propensity to import MPI =
0,1.
a) Calculate the equilibrium output in this economy.
b) Demonstrate whether leakages equal injections to the circular
flow.

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...

Assume that GDP (Y) is $6000, personal disposable income (Yd) is
$5100, and the government budget deficit (BD) is $200. Consumption
(C) is $3800 and the trade deficit is $100. Also, assume that Yd =
Y+TR-TA, where TR are the government transfers and TA are the
taxes.
a. How large is saving (S)?
b. How large is investment (I)?
c. How large is government spending (G)?

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...

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...

Suppose that the economy is characterized by the following
behavioral equations:
C =160+0.60YD
I = 150
T = 100
Assume that government spending (G) is equal to
110.
Equilibrium output (Y) =
Total demand is _______ production.
Private saving =
Public saving =
Total saving is _____ investment.

In the Keynesian Cross, assume that the consumption function is
given by: C = 200 + 0.8 (Y-T).
Assume that: I = I ̅= 100, G = G̅ =100, T = T̅ =100.
a) Use graphical analysis to demonstrate the determination of
equilibrium income.
b) What is the equilibrium level of income?
c) If government spending increase to 125, what is the new
equilibrium income?
d) Now instead of assuming T = T̅ , assume that T = T̅ +...

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