Question

Part C The following equations characterize an open economy in billions of dollars. C = 100 + .6 (Y – T) T = 40 I = 48 G = 64 X = 76 M = 20 + .15Y (i) If government expenditures and taxes both increased by $15 billion, what would be the change in equilibrium income?

Answer #1

Part C The following equations characterize an open economy in
billions of dollars. C = 100 + .6 (Y – T) T = 40 I = 48 G = 64 X =
76 M = 20 + .15Y (f) If the national income were $340 billion. What
is the value of C, M, and S? 3 marks

Part C The following equations characterize an open economy in
billions of dollars. C = 100 + .6 (Y – T) T = 40 I = 48 G = 64 X =
76 M = 20 + .15Y (g) If national income were $400 billion, would
inventories be below or above the desired inventories, and by how
much to the actual and desired inventories differ? Interpret your
result and provide the implication of your answer. 2 marks

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...

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:
The equilibrium level of real GDP.
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
income and
expenditure. Do...

Assume the following equations summarize the structure of an
open economy:
C= 500 +
.9 (Y –
T)
Consumption Function
T = 300 +
.25
Y
Tax
I = 1000
– 50 i Investment equation
G =
2500
Government
Expenditures
NX = 505
Net Export
(M/P)d =
.4 Y -37.6 i Demand for Money (i= interest rate)
(M/p) s =
3000
Money Supply
5- Derive the equation for the LM curve.
6-...

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
output is Y=1,200. How much is planned spending (PAE)?...

IS-LM Model (Closed Economy)
The following equations describe a small open economy.
[Figures are in millions of dollars; interest rate (i) is in
percent]. Assume that the price level is fixed.
Goods Market
Money
Market
C = 250 +
0.8YD
L = 0.25Y – 62.5i
YD = Y + TR –
T
Ms/P = 250
T = 100 + 0.25Y
I = 300 – 50i
G = 350; TR = 150
Goods market equilibrium condition: Y = C + I...

Consider the following short-run, open economy model of the
economy.
Goods Market
C = 100 + 0.9(Y − T) I = 50 − 7.5r; NX = −50 G = 200; T =
100
Money Market
M = 4,000 P = 10 L(r, Y) = Y − 350r
a. (4 pts) Derive the IS and LM equations and put them on a
graph with the real interest rate (r) on the vertical axis and real
GDP (Y) on the horizontal axis....

Consider an economy described by the following equations (same
equations as previous exercise):
Y = C + I + G,
G = 2,000
T = 2,000
C = 250 + 0.75YD
I = 750
a) Calculate the expenditure multiplier.
A.
-1.33
B.
1.33
C.
-4
D.
4
E.
3
F.
-3
b) Calculate the change in Y and the new level of Y if G
increases by $400.
Change in Y =
New level of Y =
A.
-1200
B....

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...

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