Question

.Assume that an economy does not have any import or export as well as any transfer...

.Assume that an economy does not have any import or export as well as any transfer of money from Government to household in a given period. The economy has an initial investment of $1000 million and Government expenditures of $ 1000 million. The economy’s marginal propensity to consume and the flat tax rate for the given period are 0.60 and 20% respectively.

i. 6 marks. With the help of inflow and outflow identity, please calculate the aggregate demand of the economy. Y = C+ I+G+NX, Tax Rates τ = T/Y or T = τY, c = mpc, and mps = 1-c , Government Deficit = (G-T)

ii. 2. marks. Please verify whether the government budget is balanced. ii. 2 marks How much is the surplus or deficit for the period if there is any?

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
Assume that an economy does not have any import or export as well as any transfer...
Assume that an economy does not have any import or export as well as any transfer of money from Government to household in a given period. The economy has an initial investment of $1000 million and Government expenditures of $ 1000 million. The economy’s marginal propensity to consume and the flat tax rate for the given period are 0.60 and 20% respectively. i. With the help of inflow and outflow identity, please calculate the aggregate demand of the economy. Y...
Question 2 Net export (NX =X-IM), where X is export and IM is import. Now assume...
Question 2 Net export (NX =X-IM), where X is export and IM is import. Now assume that the proportion of additional income that is spent on import is 0.1, this is called the marginal propensity to import (mpim)). This is similar to the MPC. Assume that import depends on income such that the total import is IM=0.1(Y) here 0.1 is mpim. Let C=1000+0.5Yd, I=300, G=200, T=100 and X=300. Yd=Y-T+TR and TR=200. Note that T and TR represents Taxes and transfer...
15. The type of good with the largest import in the U.S. is: A. capital goods....
15. The type of good with the largest import in the U.S. is: A. capital goods. B. consumer goods. C. industrial goods. D. automobiles. 16. The type of good with the smallest trade deficit in the U.S. based on data from 2016 is: A. foods, feeds, and beverages. B. capital goods. C. industrial goods. D. automotive goods. 17. Countries that have a trade surplus have a: A. positive net capital outflow. B. positive net capital inflow. C. negative net capital...
Consider an open economy with the following specifications: C= 200 - 0.85Y T= 300 G= 400...
Consider an open economy with the following specifications: C= 200 - 0.85Y T= 300 G= 400 I = 120 X= 40 M= 30 Derive the savings function and show that . MPS + MPC = 1 [3 marks] Define a budget deficit and state whether the government is in a deficit or surplus.                                                                                                                                                          [3 marks] Given that the economy is open, state and explain the components of Aggregate demand (AD).                                                                                                                      [4 marks] Derive the equilibrium income...
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-...
You are given the following income-expenditures model for an economy :    Consumption C = 300...
You are given the following income-expenditures model for an economy :    Consumption C = 300 + .64Yd Tax (T) = $60 Government expenditure G = $100 Investment (I) = $120 From above data calculate the follows: Equilibrium level of income At the equilibrium level of income, what is the amount of consumption? At the equilibrium level of income, what is the amount of savings? Marginal Propensity of Saving (MPS) Tax multiplier in this economy? Budget deficit Unplanned inventory
The following is a model that describes the economy of Ghana with all values in (GHȼ...
The following is a model that describes the economy of Ghana with all values in (GHȼ million). Y = C + I + G + X – M C = 1200 + 0.9Yd Yd Yd = Y – T T = 200 + 0.1Y I = 300 G = 1000 X = 600 M = 400 + 0.1Yd (where Y is national income, C is consumption, G is government spending, X is export, M is import, Yd is disposable income...
Suppose you are developing a Keynesian Cross Model with the following information: C = 220+(0.75(Y-T), Planned...
Suppose you are developing a Keynesian Cross Model with the following information: C = 220+(0.75(Y-T), Planned Investment I = 500, G = T= 500 a. Please find out the equilibrium income. b. Please find out what is the consumption at the equilibrium level. c. Please graph the Keynesian Model to locate the equilibrium between the income and expenditure. d. What level of government purchase is required to achieve an income level of $ 3700? e. What is the mpc for...
Income    (Yd) Consumption Expenditure Saving Investment Expenditure Government Expenditure Net Export Expenditure Aggregate Expenditure $8000...
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)...
Assume that the consumption schedule in the US economy is given by C= $20 billion +...
Assume that the consumption schedule in the US economy is given by C= $20 billion + 0.8D Where C is consumption in billion and D is disposible income (in billion) . Answer the following a) Obtain marginal propensity to consume (MPC) and marginal propensity to save (MPS). b) Obtain consumption, average propensity to consume (APC) and  marginal propensity to save  (APS), when D = $200 billion. c) obtain the tax multiplier and spending multiplier. d) Suppose a negative demand shock caused real...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT