Question

(a) Assume that Y = 5,000, DI = 4,100, BD = 200, C =3,800 and NX...

(a) Assume that Y = 5,000, DI = 4,100, BD = 200, C =3,800 and NX = -100, where Y is GDP, DI is disposable income, BD is government’s budget deficit, C is consumption spending and NX is next exports. Find the values for saving (S), investment (I) and government spending (G) in this economy.

(b) If a country has a trade deficit, its government must necessarily have a budget deficit. True or false? Explain.

Homework Answers

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Assume that GDP (Y) is $6000, personal disposable income (Yd) is $5100, and the government budget...
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)?
Suppose the following aggregate expenditure model describes the US economy: C = 1 + (8/9)Yd T...
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...
Consider an economy with the given equations. Y = C + I + G + NX...
Consider an economy with the given equations. Y = C + I + G + NX Y=$5500 G=$1100 T=$1200 C=$200+0.60(Y−T) I=1100−50r NX=1270−1270? r=r*=5 b. Suppose now that G rises to $1400. Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate. Public savings = $_____ National savings = $____ Investment = $_____ Net exports (trade balance) = $____ Exchange rate _____ c. Suppose that the world interest rate rises from 5 to 12...
Y = C + I + G + (X – M) C = C0 + (mpc)(DI)...
Y = C + I + G + (X – M) C = C0 + (mpc)(DI) I = I0 + (mpi)(Y) M = M0 + (mpm)(DI) DI = Y – T T = (t)(Y) Where Y is the level of real GDP in the economy, DI denotes the disposable income in the economy, C represents the level of consumption in the economy, C0 is the autonomous consumption level, mpc denotes the marginal propensity to consume, I is the level of...
Saving and net flows of capital and goods In a closed economy, saving and investment must...
Saving and net flows of capital and goods In a closed economy, saving and investment must be equal, but this is not the case in an open economy. In the following problem, you will explore how saving and investment are connected to the international flow of capital and goods in an economy. Before delving into the relationship between these various components of an economy, you will be asked to recall some relationships between aggregate variables that will be useful in...
1.Which of the following is a true statement about the multiplier? * The multiplier effect does...
1.Which of the following is a true statement about the multiplier? * The multiplier effect does not occur when autonomous expenditures decrease The multiplier is a value between zero and one The smaller the MPC, the larger the multiplier The multiplier rises as the MPC rises 2.According to the Keynesian model of the macroeconomic, the most effective means for closing a recessionary gap is * Decrease in marginal tax rates which shift SRAS Increases in government spending which shift AD...
These equations represent the AE model of Country X and correspond with Question #1 C =...
These equations represent the AE model of Country X and correspond with Question #1 C = 0.75(DI) + 3000 I = 3000 G = 2000 X = 2000 M = 1000 T = 4000 DI = Y – T C = consumption expenditure, DI = disposable income I = autonomous investment G = government expenditure X = exports M = imports T = tax revenues Y = real GDP 1. What is the value of the government expenditure multiplier in...
Equilibrium Values and Saving Assume that GDP (Y) is 5,000. Consumption (C) is given by the...
Equilibrium Values and Saving Assume that GDP (Y) is 5,000. Consumption (C) is given by the equation C = 1,000 + 0.3(Y – T). Investment (I) is given by the equation I = 1,500 – 50r, where r is the real interest rate in percent. Taxes (T) are 1,000. Government spending (G) is 1,500. What are the equilibrium values of C, I, and r? What are the values of private saving, public saving, and national saving? Now assume there is...
Y = 5,000 C = 1,000 + 0.3(Y - T) I = 1,500 - 50r T...
Y = 5,000 C = 1,000 + 0.3(Y - T) I = 1,500 - 50r T = 1,000 G = 1,500 where Y is total income (GDP), G is government spending, C is aggregate consumption, I is the investment function, T is government taxes and r is the real interest rates in percent. b. Jupiter Island is a small open economy (with perfect capital mobility) in the world economy described above, though not involved in the technological innovation. Use the...
In the Keynesian Model assume the following information: C=1000+0.5Yd I=300 G=200 T=100 here Yd=Y-T. Note that...
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...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT