Question

If an economy is described as: M/P = Y-100r G = T = 1000 M =...

If an economy is described as:

M/P = Y-100r

G = T = 1000

M = 3000

P = 1

I = 1000-100r

C = 600+0.8(Y-T)

What is the equilibrium interest rate and level of income?

If the government increases tax and spending by 10%, what is the new interest rate and level of income?

If the central bank needs to change the interest rate to the initial rate, what is the money supply? what is the new level of income?

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 economy is initially described by the following equations: C = 500 + 0.75(Y - T);...
An economy is initially described by the following equations: C = 500 + 0.75(Y - T); I = 1000 - 50r; M/P = Y - 200r; G = 1000; T = 1000; M = 6000; P = 2; where Y is income, C is consumption, I is investment, G is government spending, T is taxes, r is the real interest rate, M is the money supply, and P is the price level. a. Derive the IS equation and the LM...
If a small economy can be described by the following equations: C = 50 + 0.75...
If a small economy can be described by the following equations: C = 50 + 0.75 (Y − T) I = 180 − 15r NX =200−50ℇ M/P =Y - 40r T =200 G=200 M = 3000 P = 3 r ∗ =6 a. Derive and graph the specific IS *and LM* curves for this economy. b. Calculate the equilibrium exchange rate, level of income, and net exports. c. Assume a floating exchange rate. Calculate what happens to the exchange rate,...
Suppose the economy of Ansonia is described by the following: C=400+0.6Yd, T=600, G=800, I=500 (a) Calculate...
Suppose the economy of Ansonia is described by the following: C=400+0.6Yd, T=600, G=800, I=500 (a) Calculate the equilibrium level of output. Graph your solution. (b) If the government spending increases by 200 what is the new equilibrium level of output? Use the government spending multiplier. (c) If the government increases taxes by 200 what is the new equilibrium level of output? Use the tax multiplier. (d) If the government increases taxes and spending by 200 what is the new equilibrium...
Suppose that economy of Portugal is characterized by the following C = 200 + 0.5 (Y...
Suppose that economy of Portugal is characterized by the following C = 200 + 0.5 (Y - T) Represents the consumption function I = 600 – 30 r represents the investment function G = 300 represents the public spending T = 300 represents the level of taxation (m/p)d = y - 40 r represents the money demand function (m/p)s = 1500 r represents the real money supply d Y represents the global output Find the IS curve the LM curve...
An economy is described by the following equation: C = 1600 + 0.6 (Y - T)...
An economy is described by the following equation: C = 1600 + 0.6 (Y - T) - 2000 r IP = 2500 - 1000 r G = 2000 T = 1500 C is the consumption, IP is the planned investment, G is the government spending, T is the net taxes, r is the real interest rate. This economy is a closed economy meaning that the Net Exports are always 0, i.e. NX = 0. a. Find an equation relating the...
A small open economy is described by the following equations: C = 50 + .75(Y -...
A small open economy is described by the following equations: C = 50 + .75(Y - T) I = 200 - 20i NX = 200 - 50E M/P = Y - 40i G = 200 T = 200 M = 3000 P=3 i* = 5 b. Assume a floating exchange rate and constant expectations. Calculate what happens to the exchange rate, the level of income, net exports, and the money supply if the government increases its spending by 50. Use...
C = 100 + 0.75YD I = 225 + 0.15Y - 600i G = 450 T...
C = 100 + 0.75YD I = 225 + 0.15Y - 600i G = 450 T = 100 a. Derive the IS relation. b. The central bank sets an interest rate of 75% (i = 0.75). How is that decision represented in the equations? c. What is the level of real money supply when the interest rate is 75%? Use the expression: ?? = 3 ? − 9 9 0 0 ? d. Solve for the equilibrium values of C...
Assume the following equations summarize the structure of an open economy:           C= 500 + .9...
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-...
Suppose the economy is described by the following equations: ​C = 350 + .7(Y – T)...
Suppose the economy is described by the following equations: ​C = 350 + .7(Y – T) ​I = 100 + .1Y - 1000i ​G = 500; T = 500 Money Supply (M/P)s = 3200 ​Money Demand (M/P)d = 2Y – 4000i a.​Write an equation for the IS relation. b.​Write an equation for the LM relation. c.​Find the equilibrium levels of Y and i. d.​Write the Aggregate Demand equation for this economy with Y as a function of P. e. ​Suppose...
Consider an economy described by the equations: ? =??! "?! " 2 ?=2500+0.5(?−?) ?=2000−60? ?=2000 ?=1300...
Consider an economy described by the equations: ? =??! "?! " 2 ?=2500+0.5(?−?) ?=2000−60? ?=2000 ?=1300 where A = 4, K = 1000 and L = 4000. a) (8 points) Find the supply of loanable funds in this economy. b) (8 points) Government can affect the equilibrium real interest rate by changing the government spending. What should be the new government spending, ?#$%, such that new equilibrium real interest rate is 10?
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT