ECO202Y1 Quiz: eco202 assignment 3 and self generated solutions.pdf

189 views3 pages

magentagerbil794

2 Mar 2012

School

Department

Course

Professor

For unlimited access to Study Guides, a Grade+ subscription is required.

Document Summary

Chapter 3, questions 1, 2, 3, 4, 5, and 6. Disclaimer: these solutions are just guidelines for you, and may not include a complete solution for the questions and problems in your homework, as you must present in your assignments and/or exams. In your solutions you must show your work, and demonstrate your line of thinking clearly. Please, always check my calculations for unintentional typos or miscalculations. Transfers are not included in g. c. false. It is between zero and one. d. true: false. Demand = supply=output, where demand includes private consumption, government spending, investment, and net export. f. false. Equilibrium output increases by the multiplier factor, 1/(1-c1). Z= c+ g + i z =160 +0. 6*(y-100) +150 +150. Line z = y has a slope of 45 degree. Z= y y = 400 + 0. 6 y. Y=1000 (point y* in the graph) (equilibrium output/income/demand/expenditure) b)- equilibrium disposable income:

Related Questions

Suppose that the economy is characterized by the following behavioral equations: C = 160 + 0.6Yd I = 150 G = 150 T = 100

a. Solve for equilibrium output and consumption expenditure.

b. Assume that G is now equal to 110. Solve for equilibrium output.

c. The government is willing to consider an increase in public spending only if the multiplier is higher than 1.5. Base on your calculations will the government implement the increase in government spending?

blushsardine940

5. Suppose that there is no private investment, no government sector, no international trade in an economy. The aggregate demand is equal to total consumption demand. If the autonomous part of consumption (is 30 and the marginal propensity to consume (is 0.8, what is the multiplier? Explain the derivation procedure and the final equilibrium output equation showing the multiplier.

6. Suppose that there is no government sector and no international trade in the economy. If the autonomous part of consumption (is 30, the marginal propensity to consume (is 0.8, and the given private investment is 60, what is the multiplier? Show the derivation procedure and the final equilibrium output equation with multiplier.

7. Suppose that the government imposes a lump sum tax, T, on the income. If the consumption demand is described by where and the private investment is given as , what is the multiplier. Derive the equilibrium output equation that shows the multiplier.

For questions from 8 to 12, suppose that the economy (that is not engaged in international trades) is characterized by the following behavioral equations:

Consider an economy in which autonomous consumption is 800, the marginal propensity to consume is 0.8, investment is 400, government spending is 500, taxation is 400, and net exports are 100.

A. What is the equilibrium GDP in this economy? Show your work. (3 points)

B. What is the savings at this level of GDP? Show your work. (3 points)

C. What are the spending and tax multipliers? Show your work. (4 points)

D. If government spending increases by 200, what is the new equilibrium GDP and what is the increase over the original equilibrium GDP? Show your work. (4 points)

E. If the government increases both spending and taxation by 200, what is the new equilibrium GDP, and what is the increase over the original equilibrium GDP? Show your work. (4 points)

champagnesea-lion818

ECO202Y1 Quiz: eco202 assignment 3 and self generated solutions.pdf

Document Summary

Get access

Related textbook solutions

Principles of Economics

Principles of Macroeconomics

Principles of Microeconomics

Related Documents

ECO202Y1 Lecture : eco202 assignment 4 and self-generated solutions.pdf

Related Questions