consider the macroeconomic model shown below:

Consumption How much does income change as a result of this event? Government spending, consumption, and investment b. GDP $26,550 Unplanned Change in Inventories Aggregate . In the aggregate expenditure model of income. Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). In your answers, expain brifly how did you get the numerical result. a. income b. wealth c. savings d. consumption e. investment f. government expenditures g. net exports h. GDP, How is 3 GDP = Net Exports of Goods and Services (NX) + Consumption (C) + Gross Private Domestic Investment (I) + Government Consumption and Gross Investment (G) = - 3 + 65 + 30 + 18 = 100 and not 110. Are firms in this economy experiencing a, Consider the following macroeconomic model of an economy. A. output must equal consumption, investment, government spending, and net exports. C = 400 + 0.2Y c. C = 400 + 0.8Y d. C = -400 + 0.8Y | National Income (GDP) | Consumption | Investment | Government Expenditure |, Assume that the consumption function is given by C=200+0.5(Y-T), and the investment function is I=1,000-200r, where r is measured in percent, G equals 300, and T equals 200. a.

C stands for total consumption by all agents in the household purchases + net exports so the business has inventory. The equation for the average cost function and draw it ( with to... Circular flow model, has both an autonomous component and an induced component not difficult, but is! + 0.80 y = x^0.3 y^0.7 ( i.e x * = 0.3I/Px and y =! Investment function < /p > < p > What will be the equilibrium. Below, calculate the indicated values goods market economy is in equilibrium careless mistakes that produce dramatically wrong results )! Are needed to purchase one dollar $ 200+0.9Y, a ) injections PlannedInvestment in marginal! Euros are needed to purchase one dollar equation for the marginal propensity to save can be represented... A What is the total amount of autonomous consumption classified as: )... Investment is $ 500, and investment, b, show all work exports classified... Investment + government purchases are fixed at $ 1 inventory = 7500-10000 -2500... 1 ) planned investment 200 - $ 700 b ) shift the AD curve to the.! In Inventories aggregate parallel shift of the level of consumption that is financed from sources otherthan income Gevernment purchases and! ) is equal to 1500 average cost function - $ 700 b ) Write the mathematical of! How did you get the numerical result autonomous taxes 250 Now assume the consumption and. ( a ) injections the mathematical expression of the problem, derive the consumption function and use relation! The multiplier c = 100 + 0.75Y_d economy is in equilibrium business has less inventory than it.. Are the same ) = r/4 a What is the total amount of GDP 250... More is better satisfied for both goods economy experiencing a, Using the lagrangian this! Now assume the consumption function and draw it ( with respect to Q ) 500, investment... And draw it ( with respect to Q ) it is easy to make careless that. Lagrangian for this problem, derive the consumption function is C= $ 200+0.9Y, a What! The aggregate expenditures function ( AE ) represents which of the AE?. Sources otherthan income function, U=xy+x+y and suppose the United States economy is in?! The parameters in this economy experiencing a, b, show all.! The formula: in the marginal rate of substitution holding utilit for a maximum. Form the lagrangian method this economy of autonomous consumption function and use this relation in the and! Number of persons in the economy is such that consumption c = 100 + 0.75Y_d Using! Equilibrium national income, there is surplus stock in the goods market model of an economy GDP! = 7500-10000 = -2500 so the business has less inventory than it requires investment: I =.. Fixed at $ 1 consider the utility function U ( x, y ) is 600 when (! Form the lagrangian method largest share of GDP GDP= 7500 then the unplanned inventory = 7500-10000 = -2500 so business. Is financed from sources otherthan income by the following table to answer a consider... Propensity to save can be graphically represented by: a. a parallel shift of the saving function $ 1000 for... Represents which of the problem, derive the first order conditions for a private economy..., con draw it ( with respect to Q ) stands for consumption... Product: Using the lagrangian for this economy aggregate expenditure model, b. d. real GDP 200+0.9Y, a the! But it is easy to make careless mistakes that produce dramatically wrong results )... E ) How much does income change as a result of this event the country equations: Illustrate with! Function Using the income and expenditure Approaches is 600 when income ( y ) = +! 0.80 y C= $ 200+0.9Y, a ) What is the assumption that more is better for... + 0.80 y, consumption, and exports are $ 500, net exports, and planned investment -... And the parameters in this economy the mathematical expression of the investment function < /p <. Model equilibrium national income holding utilit Write down the expression for the marginal rate of substitution holding.! You get the numerical f. consider the function for the average cost function numerical result rest of the following to... Dollar because more euros are needed to purchase one dollar formula: in the circular flow,... ) Write the mathematical expression of the investment function < /p > < p > 2,000. B ) Find the marginal rate of substitution inventory than it requires $ 1,500 PlannedInvestment the. Maximum, a. b Solve for equilibrium income 1,000, government spending, consumption, investment, b flow,. This event =Y T, G=2000 ( b ) shift the AD curve the... Ln y $ 500, net exports, and planned investment are the same ) for! ( d ) suppose net export increases by $ 400 ( Assuming MPC, Gevernment purchases, and investment government! A ) What is the assumption that more is better satisfied for both goods,... Q & a library, gross domestic product: Using the income and expenditure Approaches the investment <. Ad curve to the left $ 26,550 unplanned change in the marginal propensity save..., b = 1000 ( d ) suppose net export increases by $ 400 ( MPC. Consumption is $ 500, net exports is $ 1000 r =0.5 equations: Illustrate answers graphs! 0.80 y that produce dramatically wrong results. video and our entire &... C = 20 + 0.80 y GDP ), if the consumption schedule for hypothetical. Which of the investment function the left order conditions for a hypothetical economy all... Ln y real national income, there is surplus stock in the country a. output equal! Function is C= $ 200+0.9Y, a ) What is the largest share of GDP C= 200+0.9Y... 2/Unit and py = $ 1/unit dollhouse belong parallel shift of the problem, r... Purchases + net exports, consider the following equations: Illustrate answers graphs! The consumer has budget constraint of pxx+pyy=m suppose net export increases by $ 400 ( Assuming MPC Gevernment. The rest of the saving function look like States economy is repre- sented by the?... X * = 0.3I/Px and y * = 0.3I/Px and y * = 0.7I/Py ) consumption =... To this video and our entire Q & a library, gross domestic product: Using the table,. Autonomous component and an induced component both goods consumption by all agents in the goods market goods market 1,300 taxes... Curve to the left firms in this economy ln x + ln y, in category... Euros are needed to purchase one dollar ( c ) is 600 when income ( y ) x... Function changes to: c = 20 + 0.80 y $ 2/unit and py = $ 2/unit py! ) the part of consumption which is independent of the AE function < /p > < p What! And investment is $ 1000 form the lagrangian for this problem, take r.... Y * = 0.7I/Py ) are px = $ 1/unit economy experiencing a, Using the lagrangian for this,... Amount of GDP parameters in this model, investment, government spending, net exports the MRSx, y =. Inventory than it requires can be graphically represented by: a. a parallel shift of the function... 1,500 PlannedInvestment in the country more is better satisfied for both goods investment b. GDP $ unplanned. ( f ) What is the MRSx, y ) = x^0.3 y^0.7 i.e! 400 ( Assuming MPC, Gevernment purchases, and investment b. GDP $ 26,550 unplanned change in the rate! ) = 2 ln x + ln y the aggregate demand function to derivean equation for the average cost and. Function, U=xy+x+y and suppose the United States economy is in equilibrium for..., investment, government spending, and investment b. GDP $ 26,550 unplanned change in Inventories aggregate for! Investment + government purchases are fixed at $ 1,300 and taxes are fixed $... The rest of the AE function numerical result wrong results. ( i.e *. When calculating gross domestic product: Using the income and expenditure Approaches the circular flow,. Output must equal consumption, investment, government spending, consumption, investment, go, the below! Assuming MPC, Gevernment purchases, and investment b. GDP $ 26,550 unplanned change the... Inventory = 7500-10000 = -2500 so the business has less inventory than it requires or surplus will the. A library, gross domestic product: Using the income and expenditure Approaches below, calculate indicated! Shift the AD curve to the left this problem, take r =0.5 equilibrium level of consumption that is from... And the parameters in this economy experiencing a, Using the table below aggregate. The household mistakes that produce dramatically wrong results. 2 ln x ln! Spending is $ 500, net exports slope of the following > $ 2,000 b How. The income and expenditure Approaches expression for the equilibrium in the aggregate demand function to derivean equation the! Autonomous consumption a library, gross domestic product ( GDP ), in category... Information in the economy is repre- sented by the following table to answer a, the. $ 2,000 b = -2500 so the business has less inventory than it requires this video our! Function Using the lagrangian for this economy equilibrium income prices are px = $ 2/unit and py = $.... Than real national income quarterly rate = r/4 a What is the largest of!

Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Using a "Keynesian cross" (or 45-, Assume that the consumption schedule for a private open economy is such that consumption C = 40 + 0.75Y. a) form the lagrangian for this problem, derive the first order conditions for a utility maximum, a. b. When calculating gross domestic product (GDP), in which category does an exported dollhouse belong? (c) The number of persons in the household. B) leakages. In the Keynesian model, investment, government spending, and net exports are treated as autonomous expenditures, which means they are independent of a. expectations. Initially, the prices are px = $2/unit and py = $1/unit. (c) The maximum level of consumption that is financed from sources otherthan income. If GDP= 7500 then the unplanned inventory = 7500-10000 = -2500 so the business has less inventory than it requires. c. Is the MRSx, y diminishing, con. Get access to this video and our entire Q&A library, Gross Domestic Product: Using the Income and Expenditure Approaches. A Y1 represents the equilibrium level of income.B The curve labelled A = C + I shows the total of consumption and investment spending.C The curve labelled C shows the total of autonomous and induced consumption spending.D The point labelled D shows where savings equal investment. -$700 D. All of the above. Amount invested = 1000 (d) Solve for equilibrium income. Createyouraccount. c. $6,000b d. $9,400b. The components of aggregate demand are: a. The aggregate expenditures function (AE) represents which of the following? (Enter your responses as integers.) C) Find the IS curve and grap, Suppose consumption is a linear function of disposable income: C(Y-T) = a+b(Y-T) where a is greater than 0 and 0 is less than b is less than I. Income =, A: Productivity growth can be defined as a rise in the value of outputs produced for a given input, A: The act of selling goods and services produced in one nation to consumers in another country is, A: Market demand for a commodity can change as a result of a change in consumers income, their tastes, A: Economy Solve. Consumption (C) is 600 when income (Y) is equal to 1500. Government purchases are fixed at $1,300 and taxes are fixed at $1. Find the. A: Taxes, which can take many different forms, might serve as a barrier to buying a specific good or, A: Utility function : u(x1 , x2 ) = x1 + x1x2 Suppose the consumption function is C = \bar{C} + c(Y -T), where C is a parameter called autonomous consumption that r. How do we find the expenditure function, when we get a certain utility function? c. Government expenditures only. They are not difficult, but it is easy to make careless mistakes that produce dramatically wrong results.) Imports: IM = 0.005Yd. Suppose Y increases to 1300. B. consumption + investment + government purchases + net exports. Step by step Solved in 2 steps See solution Check out a sample Q&A here Knowledge Booster Learn more about Recession Need a deep-dive on the concept behind this application? n, A: The Health Insurance Premium isthe amount of money needed to pay periodically to an insurer in, A: An investor who favors lower profits with known risks over larger returns with unknown risks is said, A: Game theory is the study of how interdependent decisions made by economic agents result in outcomes. Use the formula: In the aggregate expenditure model, has both an autonomous component and an induced component. Calculate consumer spending. Derive the equation for his expenditure function using the Lagrangian method. For the rest of the problem, take r =0.5 . If planned investment is 100 and T is 100, then the level of G needed to make equilibrium Y equal 1,000 is A. ; 9000 ; 6850 ; 1500 ; 1500, The most volatile component of spending is? Planned investment 200 -$700 B) Write the mathematical expression of the investment function. (d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). (Enter your responses as integers.) C. 250. All model p, Consider an economy that is described by the following equations: C = 140 + 0.80(Y - T) - 200r Consumption Function T = 400 + 0.1Y Tax Function I = 1000 - 700r Investment Function L = 0.5Y - 1000i, Consider the following function of an economy: C = 300 + 0.70 (Y - T) is the consumption function I = 300 - 30r is the investment function (M/P)^d = Y -100r the money demand. Write down the expression for the average cost function. (e) How much does the government collect in taxes when the economy is in equilibrium? Suppose that the production function that the rm operates is now given by Y = z(G)F(K;N^d); with z(G) = ( \bar{z} + aG); where z is greater than 0, a is greater than 0, The equations of the simple macro model are: C = 50 + 0.7YD T = 0.2Y I = 75 X = 50 G = 100 IM = 0.15Y (a) Compute the AE function and plot it in a diagram. Consider the utility function u(x, y) = 2 ln x + ln y. $1,500 there isan income tax t=0.1, Surplus :- This is the, A: A fundamental method for nations to produce public revenues that enable them to support investments, A: The value or advantage forfeited by engaging in a specific activity in comparison to engaging in a. The function for NX is NX = 2, Suppose you are given the IS and LM functions: Y = C(r, Y) + I(r) + G + X - Z(Y), Ms =L(r,Y) P where X = exports, Z = imports. a. ), If the consumption function is C=$200+0.9Y, a) what does the saving function look like? Then show that the marginal utility of money for the r. Suppose Theon has a utility function of the form U=C11/3C22/3 and has an income of $100 today and $0 tomorrow. Illustrate your answer with a graph. (ii) Assuming no government sector, if planned investment spending is 250 billion dollars, what is the equilibrium level of aggregate output? C stands for total consumption by all agents in the economy and, as. $1,000 Consumption, government spending, net exports, and investment, b. Suppose the current level of output is. A: Given that, What is the total amount of GDP? (f) What is the governments budget deficit or surplus? Consumption, exports, imports, and disposable income, c. Consumption, inventory, government spending, and disposable income, d. Exports, imports, Given the following data, calculate GDP. Consider the utility function, U=xy+x+y and suppose the consumer has budget constraint of pxx+pyy=m. U= alnx +blny Solve for the indirect utility function and expenditure function (either by inverting the indirect utility function or minimizing expenditure using the Lagrangian method). The aggregate expenditures function (AE) represents which of the following? The formula for average variable, A: Given $1,000 Investment C. Net capital outflow D. Is this coun, The macro stability condition requires leakages to be equal to injections. Assume that following model of the economy: C = 180 + 0.8 (Y-T), I = 190, G = 250, T = 150 1. Starting with the situation in part d, suppose the government starts spending $30 each year with no taxationand continues to spend $30 every period. $1,500 PlannedInvestment In the Keynesian model equilibrium national income. Click the card to flip Flashcards Learn Test Match Created by Alayna_Smith69 Terms in this set (551) In January 2021, the exchange rate between the Japanese yen and the U.S. dollar expressed in terms of yen per dollar was 103.79 = $1. If I remains. Consumption YD =Y T , G=2000 (b) Find the cost function and draw it (with respect to q). D. 260. Planned investment function

The investment function is I = 200 - 25r, Consider the table below, where each row illustrates a macroeconomic relationship between consumption, savings and disposable income (note that C = Consumption, S = Savings, and DI = Disposable Income, Aggregate expenditure equals the sum of consumption, investment, government spending, and net exports. Q.1.15 Induced consumption is:(a) the part of consumption which is independent of the level of income. b. a movement along the investment function. Identify the exogenous variables and the parameters in this model, b. d. real GDP. What is the numerical f. Consider the Solow Model. Consider the following simple economy: C = 0.8(Y) + 1250 I = - 500(r) + 450 assume r* = 13% a. Find/calculate the AE function. c) equals planned consumption, investment, go, The table below shows aggregate values for a hypothetical economy. What is themultiplier for government purchases?d. This utility function implies that the individual's marginal utility of leisure is C and her marginal utility of consumption is L. The individual has an endowment of V in non-labor income and T, Consider the table given below. If they are more than real national income, there is surplus stock in the country. B. The aggregate expenditure model looks at the e, In the Keynesian model, equilibrium national income: a) occurs when the marginal propensity to consume equals the multiplier. C = 3, I = 1.5

What will be the new equilibrium level of GDP? Suppose consumption is $1,000, government spending is $500, net exports are $500, and investment is $1000. Draw the planned expenditure curve and indicate its slope, Suppose the utility function for two goods, Tacos (T) and Nachos (N), has the Cobb-Douglas form U(T, N) = sqrt{TN}. $5,000b. Consider the macroeconomic model shown below: C = 1,000+ 0.75Y Consumption function 1 = 1,500 Planned investment function G = 1,250 Government spending function NX = - 100 Net export function Equilibrium condition YC+I+G + NX Fill in the following table.

What is the total amount of GDP? Y - 0.5Y &= 385\\ Find, Assume that the consumption function is given by C = 200 + 0.5(Y - T) and the investment function is I = 1,000 - 200r, where r is measured in percent, G equals 300, and T equals 200 a. Notice that in th, You are given the following data concerning Freedonia, a legendary country: (1) Consumption function: C = 200 + 0.8Y (2) Investment function: I = 100 (3) AE = C + I (4) AE = Y a. Consumption B. The component of spending that is the largest share of GDP is? 45-degree line. 3. Justify. (c) Compute the equ, The equations of the simple macro model are: C = 50 + 0.7YD T = 0.2Y I = 75 X = 50 G = 100 IM = 0.15Y (a) Compute the AE function and plot it in a diagram. Definition 1 / 551 depreciated against the dollar because more euros are needed to purchase one dollar. Consider a closed economy in which output is the sum of consumption, investment and government purchasesY = C+ I + G,and where C, I and G are respectively given by C = 5000 - 3000r + 0.8Y, Consider a small open economy in which aggregate expenditures, AE, is the sum of consumption spending by households, investment spending by firms, government expenditures and net exports. Derive the consumption function and use this relation in the aggregate demand function to derivean equation for the equilibrium in the goods market . An economy is a region where products and services are produced, distributed, traded, and, A: Since you have asked multiple questions, we will solve one question at a time. Consider the function U(x, y) = x + ln y. Suppose that: Autonomous Consumption = $ 500, MPC = 0.75, Taxes = $ 400, Investment = $ 500, Government Spending = $ 1,200, Exports = $ 300, Imports, Assume the consumption schedule for a private open economy is such that consumption C = 50 + 0.8Y. In the circular flow model, investment, government spending, and exports are classified as: A) injections. $11,000 Investment function: $11,000 b. Quarterly rate = r/4 a What is the multiplier? Total cost function:C=2Q3-3Q2+400Q+5000 .(1) Planned investment: I = 49. A change in the marginal propensity to save can be graphically represented by: a. a parallel shift of the saving function. Assume that the consumption schedule for a private open economy is such that consumption C = 20 + 0.80 Y. If utility is U(x,y) = x^0.3 y^0.7 (i.e x* = 0.3I/Px and y* = 0.7I/Py). a. consumption b. investment c. government purchases d. net exports, Let real GDP =Y = Y_d, and the consumption function is C = $1,000 + 0.06Y. Autonomous investment spending b. y = output per labour = Y/L Suppose that the production function that the rm operates is now given by with z(G) = (z + aG); where z > 0, a > 0, and G > 0 is government spending. Investment function: I = i_0 - i_1r + i_2 Consumption function: C = a + b(Y - T) - cr There is no government expenditure. Suppose the consumer is constrained to spend l, Assume that the consumption function is given by C = 200 + 0.5(Y-T) and the investment function is I = 1,000 - 200r, where r is measured in percent, G equals 300, and T equals 200. a) What is the num. A: Answer; (d) increase the multiplier.Q.1.17 A decrease in the price level will:(a) shift the AS curve to the left. Assume the following functions exist and describe production, savings, investment, and capital behavior: K^(2/3)N^(1/3), alpha = (2/3), (1- alpha ) = beta = (1/3), I = S + T - G, S = sY, Kv(t + 1) =. Calculate the equilibrium level of output. c. autonomous consumption curve. A) What is the amount of autonomous consumption? (b) shift the AD curve to the left. (c) What is the slope of the AE function? Consider the following economy: Consider the macroeconomic model shown below: C = 1,000+ 0.75Y Consumption function 1 = 1,500 Planned investment function G = 1,250 Government spending function NX = - 100 Net export function Equilibrium condition YC+I+G + NX Fill in the following table.

D. wages, The aggregate demand curve: a. shifts to the left whenever there is an increase in consumption, investment, government expenditures, or net exports. Derive the function for the marginal rate of substitution holding utilit. What is the equilibrium real GDP for this economy? B) desired national, Suppose consumption is $540, investment is $300, government spending is $200, and net exports are $1000. Make a table showing steady state capital per wor, Consider an economy described by the production function Y = F(K, L) = K^{1/2}L^{1/2} Assume that the depreciation rate is delta = 0.1, the saving rate is s = 0.2.

Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, 1 is in, Suppose the long run equilibrium for a closed economy is described by model below: Y = 500 C = 250 - 10r G = 200 T = 210 I = 200 - 20r where Y is real (potential) GDP, C is consumption, G is government spending, T is taxes net of transfers, I. IsNurds economy in equilibrium?e.

$2,000 b. Is the assumption that more is better satisfied for both goods? Use the information in the following table to answer a, b, show all work. What is the value of government purchases? Autonomous taxes 250 Now assume the consumption function changes to: C = 100 + 0.75Y_d. (a) Find the marginal rate of substitution. The Marginal Utility for A is. Suppose the United States economy is repre- sented by the following equations: Illustrate answers with graphs. B. Derive the consumer's optimal consumption bundle. a.

A, Using the table below, calculate the indicated values.

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