Question

Consider an economy described by the following equations: Y=C+I+G+NX, Y=8,000 G=2,500 T=2,000 C=500 + 0.75(Y−T) I=900−50r...

Consider an economy described by the following equations:

Y=C+I+G+NX,

Y=8,000

G=2,500

T=2,000

C=500 + 0.75(Y−T)

I=900−50r

NX=1,500−250ϵ

r=r∗=8.
a. In this economy, solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate.
b. Suppose now that G is cut to 2,000. Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate. Explain what you find.
c. Now suppose that the world interest rate falls from 8 to 3 percent. (G is again 2,500.) Solve for private saving, public saving, national saving, investment, the trade balance, and the equilibrium exchange rate. Explain what you find.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solution:

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
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 + NX Y = 18,500; G = 4,000; T...
Y = C + I + G + NX Y = 18,500; G = 4,000; T = 2,000 C = 750 + 3/4 (Y - T) I = 1,000 - 50r CF = 750 - 25r NX = 1,825 - 150ϵϵ The world interest rate increases to r* = 10. Solve for consumption, private and public saving, national saving, investment, the trade balance, the net capital outflow (net foreign investment), the domestic real interest rate, and the real exchange rate....
Consider an economy in the short-run described by the following equations: Z = C + I...
Consider an economy in the short-run described by the following equations: Z = C + I + G G = 500 T = 500 C = 250 + 0.75(Y – T) I = 625 a. What is the equilibrium condition that allows us to solve for Y. Find Y. Compute private saving, public saving and total/national saving at this level of Y. b. What is the value of the marginal propensity to consume? What is the value of the expenditure...
Consider the following economy Y = C + I + G Y = 5,000 G =...
Consider the following economy Y = C + I + G Y = 5,000 G = 1000 T = 1000 C= 250 + 0.75(Y-T) I = 1000 – 50r Compute private savings, public savings and national savings. Find the equilibrium interest rate. Suppose G rises to 1,250. Compute private savings, public savings, national savings and the interest rate. Explain intuitively why these variables have changed
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...
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...
Assume the economy is described by the following: Y=3,000 C=200+0.9(Y-T) I=400-40r G=T=500 R=5 NX=400-400e Solve for...
Assume the economy is described by the following: Y=3,000 C=200+0.9(Y-T) I=400-40r G=T=500 R=5 NX=400-400e Solve for net exports and the real exchange rate.
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...
MACROECONOMICS given: Crowding out with algebra. Consider an economy described by the following model. Y =...
MACROECONOMICS given: Crowding out with algebra. Consider an economy described by the following model. Y = K1/3L2/3 K = 1000; L = 1000 G = 100 T = 100 C = 250 + 0.5(Y-T) I = 600 – 100r i. Calculate the equilibrium real interest rate, national saving, public saving, private saving, consumption, output, and investment. List your numbers out like this: Y = 1000 r = 4 S = 200 Spub = 0 Spriv = 200 C = 700...
1. Consider an economy that produces and consumes bread and automobiles. In the table below are...
1. Consider an economy that produces and consumes bread and automobiles. In the table below are data for two different years: Year 2010 Year 2025 Price of an automobile $50,000 $60,000 Price of a loaf of bread $10 $20 Number of automobiles produced 100 120 Number of loaves of bread produced 500,000 400,000 Using the year 2010 as the base year, compute the following: nominal GDP, implicit price deflator and the CPI. 2. Assume that GDP (Y) is 5,000. Consumption...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT