Question

In a closed economy, without the government, the consumption expenditure equals $5,000 and the investment expenditure equals $2,000. If the population of the economy is 200, the per capita national income is:

- A. $10.
- B. $17.
- C. $35.
- D. $50.

In a closed economy without the government, income equals:

- A. aggregate consumption.
- B. aggregate savings.
- C. aggregate savings plus aggregate investment.
- D. aggregate savings plus aggregate consumption.

The savings rate designates:

- A. the fraction of income that households save.
- B. the difference between household consumption and savings.
- C. the rate of return households earn on their savings.
- D. the difference between government revenue and government expenditure.

The rate of return that households expect on their savings is determined by:

- A. tax rates.
- B. interest rates.
- C. exchange rates.
- D. government expenditure.

Answer #1

n a simple closed economy where there is no government and
investment, the consumption function of households is given by
C(Y)=60+0.6Y. The potential output in this economy at 450.
a. What is the consumption expenditure when income is equal to
zero?
b. What is the break-even point Y?
c. By how much will equilibrium income change due to the
addition of investment?
d. Suppose, now our simple closed economy added an intended
investment I=100, the consumption function of households is still...

In a simple closed economy where there is no government and
investment, the consumption function of households is given by
C(Y)=60+0.6Y. The potential output in this economy at 450. What is
the expenditure multiplier in this economy?
Select one:
a. 0.40
b. 1.66
c. 2.5
d. 0.60
e. None of the other four choices

Income
(Yd)
Consumption
Expenditure
Saving
Investment
Expenditure
Government
Expenditure
Net Export
Expenditure
Aggregate
Expenditure
$8000
$11,000
$2,500
$5,000
$12,500
12,000
14,000
2,500
5,000
12,500
20,000
20,000
2,500
5,000
12,500
30,000
27,500
2,500
5,000
12,500
50,000
42,500
2,500
5,000
12,500
100,000
80,000
2,500
5,000
12,500
1.Calculate savings, autonomous consumption, MPC, MPS, break
even income, and the equilibrium level of income (Y = AE = C + I +
G + NX) in the above given information.
2. Draw a graph...

73. Using your knowledge of economics, answer the
following:
73a. The most comprehensive (inclusive of goods) measure
of the rate at which prices are changing is:
a. the CPI
b. the balance-of-payments index.
c. the GDP Chain Price Index.
d. the index of wage.
73b.
An index of prices of all domestically produced goods in
the economy is the
a. Consumer Price Index.
b. GDP Chain Price Index.
c. Producer Price Index.
d. Wholesale Price Index.
73c. In the income-expenditure...

Income
(Yd)
Consumption
Expenditure
Saving
Investment
Expenditure
Government
Expenditure
Net Export
Expenditure
Aggregate
Expenditure
$8000
$11,000
$2,500
$5,000
$12,500
12,000
14,000
2,500
5,000
12,500
20,000
20,000
2,500
5,000
12,500
30,000
27,500
2,500
5,000
12,500
50,000
42,500
2,500
5,000
12,500
100,000
80,000
2,500
5,000
12,500
Calculate savings, MPC, MPS, break even income, and the
equilibrium level of income (Y = AE = C + I + G +NX) in the above
given information.
Draw a graph showing disposable income (Yd)...

In an economy where GDP equals 100, consumption equals 67,
investment equals 14, and government purchases equal 21,
a) exports must exceed imports by 2.
b) taxes must exceed government purchases by
2.
c) imports must exceed exports by 2.
d) net exports must equal 2.
e) none of the above.

The MPC for a closed economy is 0.75. Autonomous
consumption is $500, investment is $300, and government spending is
$400.
a) What is the equilibrium
level of real GDP?
b) If business increases
planned investment expenditure by 300 to 400, what is the new
equilibrium real GDP?
c) What is the slope of the AE
function in this economy and the value of the
multiplier?

NATIONAL INCOME
The 2019 Zambian economy shows that the autonomous consumption
expenditure is K185 million and the marginal propensity to save is
0.25. Investment function (I)=150+0.125y-10i, government
expenditure is K100 million, and net taxes are K80 million. The
report shows that investment, government expenditure and taxes are
constant. The Central Bank indicated that the money markets are
influenced by the money demand function M^d=300+Y-10i and money
supply function M^s=350+90i. The statistics show that Zambian
economy was not trading with the...

Suppose that in a closed economy with a state sector the
following relations apply: Consumption function: ? = 125 + 0.75??
where ?? = ? - ? Desirable investment: ? = 30 Government spending:
? = 50 Taxes: ? = 15
A. Find the equilibrium income, the available equilibrium income
and the equilibrium consumption.
B. Find and interpret investment and tax multipliers.
C. Calculate the savings function under the assumption that the
economy is in equilibrium as well as the...

In a closed economy, given the following:
The consumption function C = 0.8(1 – 0.25) Y +
12
The average tax rate t = 25%
The level of private investment I = 26
The level of government spending G = 14
Where Y is the national income.
Calculate the equilibrium level of income and output in the
economy.
Calculate the expenditure multiplier and show the effect
of
an increase in government spending and
an increase in private investment.

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