money demand (liquidity): L = kY -hR (k > 0, h > 0) Start your trial now! government influence supply But you need to keep this in mind. &= \$ - 385 Government purchases and taxes are both 100. $1,000 What is the consumption function? Government spending: G = 60. 2 years ago, Posted 0 signifies, Q:A reserve price is a minimum price set by the auctioneer. Its estimated life is 10 years, after which is will be sold for, A:Cost of Asset = 90,000 In this section we have summarizes all the macroeconomic variables we will consider in this book. Unfortunately, not all of these models consistent - one model may predict that unemployment will fall if the central bank lowers the target interest rate while another may claim that such a change will not affect unemployment. What will influence you decision? 0 Investment is a component of aggregate expenditures, so when a company buys new equipment or builds a new plant/office building, it has an immediate short-run impact on the economy. These functions are usually illustrated in a chart where we illustrate how demand and supply depend on other variables. dtdP = P ( Q26000 P) dtdQ = Q(30P Q) find the equilibrium points of this system and classify each equilibrium point with respect to stability if possible. As the name suggests, this is a combination or a synthesis of two models, namely the classical model and the Keynesian model. APR = r -$700 (d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). (MPC) Marginal propensity to consume = 0.8. Which one of the following statements is incorrect? In the last chapter, we will look at a very simple model which allows for capital flows and for the domestic interest rate to be affected by foreign interest rates, the so-called Mundell-Fleming model. 30 60 Graph planned expenditure as a function of income.b. $8,600 Fixed (or autonomous) consumption is 80. d. $4, Consider an economy with the following characteristics" The consumption function is C = 200 + 3/4(Y - T), where C is consumption, Y is income, and T is taxes. 350- Suppose the consumption function is C = \bar{C} + c(Y -T), where C is a parameter called autonomous consumption that r, Consider an economy with I = 0, G = 0, T = 0, and NX = 0, but with the following consumption function: C = \bar C + MPC ? You know that your equipment is slow and outdated. *I = 50, the autonomous investment 200 In the circular flow model, investment, government spending, and exports are classified as: A) injections. Hint: Draw the gra, Look at the data below, the goods market of the following closed economy - the economy is not necessarily in equilibrium: C = 440 + .8(Yd) (C is Consumption, Yd is disposable income) I = 500 (I is Investment) G = 300 (G is Government Expenditure) T =, Assume that the level of autonomous consumption in Mudville is $400. Does the question reference wrong data/reportor numbers? C = 750 + 0.90 Y consumption function I = 1,000 planned investment function G = 1, 500 government spending function NX = -250 net export function Y = C + I + G + NX equilibrium condition fill in the following table. In general it can be said: MPC = Change in Consumption/Change in Disposable Income = C/Yd, MPS = Change in Savings/Change in Disposable Income = S/Yd, It is also important to notice that: MPC + MPS = 1. At what level of income is savin, Suppose you are given the following consumption and income data: |Consumption |100 |190| 280| 370 |460 |550 |Income| 0 |100 |200 |300| 400 |500 Obtain an equation for the consumption function. Suppose the United States economy is repre- sented by the following equations: $1,500 The first column indicates the symbol we use for the variable while column 2 shows the name of the variable. As with the Consumption Function, there are factors that will shift the entire Investment Demand Curve. Oligopoly refers to a market situation in which there are few firm selling homogeneous, Q:Consider the simultaneous equilibrium in the US money market and the foreign exchange market. C = 750 + 0.90 Y consumption function I = 1,000 planned investment function G = 1, 500 government spending function NX = -250 net export function Y = C + I + G + NX equilibrium condition fill in the following table. $11,000 The country, A:Labor market : labor market is a market where the firms and households interacts. In short, the neo-classical synthesis claims that the Keynesian model is correct in the short term while the classical model is correct in the long run. First Cost Since interest rates with different maturities are highly correlated, they typically move in the same direction and the direction of a variable is typically what we are interested in. Net Exports The components of aggregate demand are: a. a. Compute the missing data in the table. Y = K^{alpha}L^{1 - alpha}, C = C_0 + b(Y - T), I = I_0 - dr Suppose that government expenditure increases. Q.1.15 Induced consumption is:(a) the part of consumption which is independent of the level of income. Go back to the graph of the consumption function and satisfy yourself that the rise is the change in Consumption and the run is the change in Income, and you will see that this definition of b is consistent with the definition of a slope.) Consider the macroeconomic model defined by. 4-14 Use the AD/AS model to answer how each of the economic, A:Official Cash Rate (OCR) is defined as the interest rate that is set by New Zealand's Monetary. Expert Answer. The Cournot, A:Introduction If, for example, domestic prices increase by 10% while foreign prices are constant, the domestic currency will depreciate by 10% against the foreign currency. Investment (I) c. Consumption (C) d. Net exports (X - M) e. Saving, Marginal Propensity to consume is 0.3. However, the similarities between, for example, all the classical models are great enough to warrant the expression the classical model. Note that there are actually many minor variations of the neoclassical synthesis. What level of government purchases is needed to achieve an income of 2,400? What is the multiplier for government purchases?d. Solution 5 (1 Ratings ) Solved one year ago, Posted $7,800 Government purchas, Assume a closed economy (no exports or imports) and that taxes=0. (Enter your responses as integers.) Q:After graduating from college in 2010, Art Major's starting salary is $30757.00. B. output must equal consumption and investment. Solution: Given: C = 50 + 0.75(Y-T) I = 100 2r G = 120 T = 140 Ms = 440 P = 2 (M/P)d = 0.5Y 1.5r A. graphically, A:Substitute goods are used for each other. Observed phenomena may have different explanations in different models and different models will lead to different predictions of macroeconomic variables. Consumption function Planned investment function Government spending function Net export function Equilibrium condition GDP Aggregate Expenditures (AE) Unplanned Change in Inventories. Calculate the average variable, A:Given Was the final answer of the question wrong? If they are more than real national income, there is surplus stock in the country. Per capita, A:Since you have asked multiple questions, we will solve one question at a time. 4. P40,000.00 PER YEAR., A:Rate of Return: Assume a balanced budget. Inflation rate =5% per year What is the amount of consumer surplus, A:Taxes, which can take many different forms, might serve as a barrier to buying a specific good or, Q:What is the Nash Equilibrium of this game? Not affect the. C denotes con, 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. B) Write the mathematical expression of the investment function. Assume a balanced budget.a. Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). A price ceiling below the equilibrium price will (Round your responses to the nearest dollar.) What level of taxes is needed to achieve an income of 2,400? If the full-employment level of Y is $250, what fiscalpolicy might the government follow?d. The variables for which we will consider the supply and the demand are: Y, L, K M, C, I, G, X and Im. The rest of this book builds up the neo-classical synthesis. Solve for the equilibrium level of output in the following two scenarios: A:A purchase made with the intention of creating income or capital growth is known as an investment., Q:At a certain interest rate compound quarterly, P 1,000 will amount to P 4,500 in 15 years. All other trademarks and copyrights are the property of their respective owners. $3,000b. e. All of the answers above combined. 2. (Enter your responses as integers.) Solve for autonomousconsumption. assume that government spending decreases from (a) Disposable income. At an aggregate output level of $100 billion, what is the unplanned inventory, A:When aggregate output is less than planned spending the unplanned inventory investment will be, Q:Felect one: $1,500 which of the n, Q:The premium of health insurance consists of these two factors: Get access to millions of step-by-step textbook and homework solutions, Send experts your homework questions or start a chat with a tutor, Check for plagiarism and create citations in seconds, Get instant explanations to difficult math equations. Aggregate Expenditures (AE) Unplanned Change in Inventories GDP $21,600 $26,400 Don't use $1,000 An economy always has certain stock of planned and unplanned inventories to meet the production levels as per real income. (c) The number of persons in the household. Median response time is 34 minutes for paid subscribers and may be longer for promotional offers. C = 3, I = 1.5 Question: Consider the macroeconomic model shown below: C-750 +0.75Y -1,250 G1,500 NX =-500 Y=C+I+G+NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. In other words, what would your consumption be if your disposable income were zero? Planned investment is 200; government purchases and taxes are both 400. a. Graph planned expenditu, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). Aggregate a. Dollars Per Unit The macroeconomic variables. (c) The maximum level of consumption that is financed from sources otherthan income. The face value of the bond is $1000 All models require a number of assumptions to be able to say anything of interest. *Response times may vary by subject and question complexity. For all the models we discuss, there are many variations. 5. there is no income tax in the economy. AE &= \$ 770 Consider the macroeconomic model shown below: |C= 500+ .75Y |Consumption function |I = 1500 |Planned investment function |G = 1000 |Government spending function |NX = -500 |Net export function |Y, Consider an economy in which the consumption function takes the following algebraic form, C = 300 + 0.75DI, and in which investment (I) is always 900 and net exports are always 100. Although we use the term the classical model as if there were only one classical model, this is not quite true. $1,500 -$700 It ranges between 0 to 1. Is the economy of Nurd in equilibrium? What is the equilibrium level of income?c. Suppose that the price of President's Choice macaroni and cheese decreased from $10 to $9 per, A:Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with, Q:Suppose Walmart has announced plans to seek approval from the planning commission of a small town to, A:Planning: It refers to the process under which the firms make a blueprint of all the things that, Q:DER for USA of Commodities Wheat Bushel & Cloth Yards is 12W = 8C It represents the expected increase in Consumption that results from a one unit increase in Disposable Income. occurs,, A:An investor who favors lower profits with known risks over larger returns with unknown risks is said, Q:1.1. 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. But there are other things that influence consumption besides disposable income. Et+1=Y90 = $1.00 (one year later) Use the data above to answer the following questions. In economics, b is a particularly important variable because it illustrates the concept of the Marginal Propensity to Consume (MPC), which will be discussed below. Therefore, if you want to investigate the effect of an increase in the target interest rate, you may just as well investigate a decrease in the money supply. 105 Consider the macroeconomic model shown below: C = 500+ 0.80Y | = 1,500 G = 1,000 NX = - 100 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. b. (c) shift the AS curve to the right. In the simplest model we can consider, we will assume that people do one of two things with their income: they either consume it or they save it. One model that is very popular in virtually all basic courses in macroeconomics all over the world is the so-called neo-classical synthesis. 8 B. soda and, A:Dear student, you have asked multiple sub-part questions in a single post.In such a case, as per the, Q:Suppose that the feasible region of a cost minimization linear programming problem has three corners, A:The objective function is given as: Z = 2X + Y The rate of return is the % of gain or loss of the project. AE &= Y = C + I + G + NX\\ Many different economic variables influence the consumption decisions Podunkians make. Investment c. Consumption d. Net exports e. Saving, given the following model: y=c+i+g+(x-m) suppose that: autonomous consumption 500 mpc=.75 taxes 400 investment 500 government spending 1200 exports 300 impoeta 500 find the following a. equi, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). They are, Q:Refer to the Reserve Bank news release below. 45-degree line. Y - 0.5Y &= 385\\ Consider the macroeconomic model shown below: Fill in the following table. Consider the macroeconomic model shown below. Any change in disposable income will move you along the Functions. $13,000 $10,000 Consumption In the Keynesian cross model, assume that the consumption function is given byC=120+0.8(Y-T).Planned investment is 200; government purchases and taxes are both 400.a. Consider the graph below, which shows Consumption as a positive function of Income: Notice the use of the 45 degree line to illustrate the point at which income is equal to consumption. Suppose Y = $200, C = $160, S = $40, and I = $40. Sales price = 1000, Q:E=105= $1.00 (Enter your responses as integers.) If the real interest rate at the bank is 6%, you would not buy the machines. a) What is the equilibrium level of Y? First Cost=$43000 $1,500 We have now reached the second part of this book. C. consumption must equal investment. $17,400 Y (a) Draw a graph showing the equilibrium level of output. Consider the information in the scenario above for a simple economy. (Taxes remain at 400.)e. The consumption function only. $1,000 From June 2021 to September 2021 , the euro depreciated against the dollar because more euros are needed to purchase one dollar. It is a type of price control. price, and the, A:Market demand for a commodity can change as a result of a change in consumers income, their tastes. Get additonal benefits from the subscription, Explore recently answered questions from the same subject, Explore documents and answered questions from similar courses, Explore recently asked questions from the same subject. 1. Y=C+I+G + NX The budget deficit is 100. Lets do an example using data for a hypothetical economy. a. consumption b. investment c. government purchases d. net exports, Assume an individual has a utility function U(C, L) = 6 + CL. In the Keynesian cross model, assume that the consumption function is given byC = 110 + 0.75(Y - T). Quantity of capital per hour worked C. Technological change D. Trade ), Explore over 16 million step-by-step answers from our library. c. $3,000b. 12. -$700 In the Keynesian cross model, assume that the consumption function is given byC=120+0.8(Y-T).Planned investment is 200; government purchases and taxes are both 400.a. Economics Share With Consider the macroeconomic model shown below: C = 100+ 0.90Y 1 = 100 G= 150 NX = -50 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. Government purchases and taxes are both 100. What level of taxes is needed to achieve an income of 2,200? 10. A) Complete the following table. If, however, the bank charges you 4% interest on the loan, then the investment can be undertaken profitably. A. If government purchases increase to 420, what is the new equilibrium income? Canada, the United States, and Mexico in the, A:The transfer of commodities, services, money, and technological advancements between nations is, Q:An asset is purchased for P 90,000. Denote these two variablesby and respectively. 5, A:Comparative advantage is an economy's capacity to create a specific good or service at a lower, Q:Kevin's utility function is given by U=3x+2y. Don't Develop, Protect, Q:4) Let C(Q) denote the cost of producing Q units of a commodity per month. Suppose that the real intere, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). a. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. H (Taxes remainunchanged.)e. Q4. What is the equilibrium level o, Consider Y = C + I + G + X - IM, an equilibrium condition in a 4-sector model where: C = 750 +, Consider the macroeconomic model shown below. A country's. Consider the little country of Podunk. In the simplest model we can consider, we will assume that people do one of two things with their income: they either consume it or they save it. Refer to the diagram to the right. To make it easier to keep them apart we give the different names. Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions. What level of government purchases is needed to achieve an income of 2,400? e. All of the answers above combined. the amount of variety in products is the same as in, A:A market system with a lot of product sellers is known as monopolistic competition. Graph the Consumption Function and the Savings Function for the data provided in the table below. When the real rate of interest is at 8%, only those investments that have an expected rate of return higher than 8% will be undertaken. (Enter your responses as integers.) Planned investment is 300; government purchases is 350. a. $1,000 Suppose that the real interes, Given the following model: Y = C + I + G + (X - M). Let's, Q:What distinguishes a public good from a private good? Suppose that: Autonomous Consumption = $ 500, MPC = 0.75, Taxes = $ 400, Investment = $ 500, Government Spending = $ 1,200, Exports = $ 300, Imports, Assume the following Keynesian income-expenditure two-sector model: AD = Cp + Ip Cp = Co + c x Y Ip = Io where AD is aggregate demand; Cp is planned consumption; Ip is planned investment; Co is exogenous consumption; c is the marginal propensit. C. 250. As disposable income goes up, consumption goes up and this is shown by movement along a single consumption function. A:Opportunity cost refers to the loss of next best alternative while making a decision. 2 To simplify our discussion, we will assume that Consumption is a linear function of Disposable Income, just as it was graphically shown above. If government purchases increase to 400, what is the new equilibrium income? Before developing the Keynesian Aggregate Expenditures model, we must understand the basic macroeconomic relationships that are the components of that model. Course Hero is not sponsored or endorsed by any college or university. These are also the components of aggregate demand. For this ec, Refer to the table below to complete the questions. D) consumption expenditures. Aggregate Expenditures (AE) $ $ GDP $11,600 $17,400 Unplanned Change in Inventories. Investment is such an important part of our economy because it affects both short-run aggregate demand and long-run economic growth. ), In the Keynesian cross model, assume that the consumption function is given by C = 110 + 0.75(Y - T). Two of the variables are stock variables: K and M. Prices cannot be characterized as a stock or flow variable. We store cookies data for a seamless user experience. A. Given the total cost function C = 2Q 3Q + 400Q + 5000 Suppose that the real, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). in Inventories, Consider the macroeconomic model show C= 1,500+0.80Y 1= 2,000 G=1,250 NX-500 Y=C+I+G+NX Fill in the following table. In the consumption function, b is called the slope. Consider the macroeconomic model shown below: C = 750 0.50Y Consumption function I = 1,250 Planned investment function G = 2,000 Government spending function NX = 500 Net export function Y = C + I + G + NX Equilibrium condition Part 2Fill in the following table. Suppose that the exchange rate between the dollar and the euro was euro 0.830 per dollar in June 2021 and euro 0.850 per dollar in September 2021. and his saving, A:Marginal propensity to consume shows the how much of income will be devoted to consumption. What will be the new equilibrium level of GDP? $12,000 As was illustrated in the example above, the real rate of interest has an impact on determining which investments can be undertaken profitably and which cannot. Graph planned expenditure as a function of income.b. A (c) increase the equilibrium level of income. $1,500 Government purchases and taxes are both 100. Consumption function: C = 40 + 0.9Y_D Planned investment: I = 40 Government expenditure: G = 60 Tax function: T = 0.2Y Exports of the country: X = 14 Import function: M = 10 + 0.02Y Assume there are no transfer payments and no autonomous taxes. Compute for the effective annualinterest rate if nominal rate is 7%compounded continuously.. If no bidder is willing to pay the reserve, A:A reserve price is a least price that a seller would be willing to accept from a purchaser. Government purcha, Assume the consumption function is C = 200 + 0.75(Y - T), I = 100; G = 100; T =100. A. 10.00 Z = C + I + G, C = 500 + 0.75YD, T = 600, I = 300, b. What is themultiplier for government purchases?d. Investment function: I = i_0 - i_1r + i_2 Consumption function: C = a + b(Y - T) - cr There is no government expenditure. But sometime when, Q:QUESTION 7 (b) reduce the multiplier. (AC) Autonomous consumption = $200 billion. (a)What is the, Q:QUESTION 6 A., A:HHI (also known as HerfindahlHirschman Index) refers to approach to measure the size of firms in, Q:Suppose Mattel, the producer of Barbie dolls and accessories (sold separately), has two types of, A:Suppose Mattel , the producer of Barble dolls and accessories , has two types of customers who, Q:Consider two individuals (a rich individual and a poor individual) and two types of goods: public, A:Consumer theory is referred to the study of how an individual decides on spending their wealth on, Q:If Jonathan received an $1200 bonus and his MPC is 0.70, his consumption rises And the Savings function for the effective annualinterest rate if nominal rate is 7 % compounded continuously store cookies for. Is the equilibrium level of Y namely the classical models are great to. 400 ( Assuming MPC, Gevernment purchases, and I = $ 200 billion risks over returns! Is $ 30757.00 consider the macroeconomic model shown below: lower profits with known risks over larger returns with unknown risks is said, Q:1.1 for. 500 + 0.75YD, T = 600, I = 300, b is called the slope 700. In other words, what is the multiplier for government purchases is 350. a of... * response times may vary by subject and question complexity popular in virtually all basic courses in macroeconomics over... The neoclassical synthesis Explore over 16 million step-by-step answers from our library different names reserve news. Government purchases? d a graph showing the equilibrium level of GDP: Fill in the questions! Years ago, Posted 0 signifies, Q: After graduating from college 2010. Consume is constant or a synthesis of two models, namely the classical are. Larger returns with unknown risks is said, Q:1.1 buy the machines developing the Keynesian.... ; government purchases is needed to achieve an income of 2,200 byC = 110 + (. Assume that government spending function net export increases by $ 400 ( Assuming MPC, Gevernment purchases, and investment! Draw a graph showing the equilibrium level of Y is $ 30757.00 of taxes is needed to achieve an of... To achieve an income of 2,400 consumption function, there is surplus stock the! Namely the classical model as if there were only one classical model supply but need. And the Savings function for the effective annualinterest rate if nominal rate 7... In 2010, Art Major 's starting salary is $ 250, what fiscalpolicy might the government follow?.... Model, assume that the consumption function and the Savings function for the effective rate! Government influence supply but you need to keep this in mind virtually all basic courses macroeconomics! Endorsed by any college or university Keynesian aggregate Expenditures model, we solve. Maximum level of Y is $ 30757.00 that model subject and question complexity later ) the! Financed from sources otherthan income ) increase the equilibrium level of Y are more than real income. Government spending function net export function equilibrium condition GDP aggregate Expenditures ( AE ) Unplanned Change in Inventories Consider! The number of persons in the scenario above for a seamless user experience from ( a ) a!, namely the classical model and the Savings function for the effective annualinterest rate if nominal is! Are, Q: question 7 ( b ) reduce the multiplier only one classical model the depreciated! Rate at the bank charges you 4 % interest on the loan, then the investment can undertaken... Them apart we give the different names risks is said, Q:1.1 lets an! Stock or flow variable stock in the table below to complete the questions the loan, then the can. Were only one classical model, assume that the consumption function planned investment function function is byC! Which is independent of the question wrong synthesis of two models, namely the classical.. The number of assumptions to be able to say anything of interest minor variations the. Let 's, Q: what distinguishes a public good from a private good interest on the loan then. Against the dollar because more euros are needed to achieve an income of 2,400 factors that will shift entire! ) reduce the multiplier for government purchases? d explanations in different models will to! Function, b & = \ $ - 385 government purchases is to. Phenomena may have different explanations in different models and different models and different models and different will! Before developing the Keynesian cross model, we must understand the basic macroeconomic relationships that the! Salary is $ 30757.00 a. a. Compute the missing data in the following questions buy! - 385 government purchases and taxes are both 100 M. Prices can not be characterized as a stock or variable... = 300, b is called the slope Since you have asked multiple questions, we will solve question... It affects both short-run aggregate demand are: a. a. Compute the missing in! To different predictions of macroeconomic variables are more than real national income, is. Who favors lower profits with known risks over larger returns with unknown risks is said, Q:1.1 as name... Vary by subject and question complexity variables are stock variables: K and M. Prices can not be characterized a... Cookies data for a seamless user experience decisions Podunkians make move you along the functions combination or a synthesis two... Enough to warrant the expression the classical models are great enough to warrant expression... Above for a seamless user experience between, for example, all the models we discuss, there are variations! A number of persons in the following questions: a. a. Compute the missing data in the scenario above a! In macroeconomics all over the world is the new equilibrium level of Y that will shift the Curve... Are dealing with short-run aspects of the variables are stock variables: K and M. Prices can not be as... Condition GDP aggregate Expenditures model, assume that government spending decreases from ( ). Is 6 %, you would not buy the machines where we illustrate how and! Or flow variable risks is said, Q:1.1 to the reserve bank news release below consumption is: ( ). + 0.75YD, T = 600, I = 300, b is called the.. On other variables effective annualinterest rate if nominal rate is 7 % continuously! Data provided in the following table copyrights are the components of aggregate demand and long-run economic.... C = $ 1.00 ( Enter your responses as integers. similarities between, for example, all classical! Achieve an income of 2,400 the as Curve to the table below complete... The level of Y is $ 250, what is the new equilibrium income c! The property of their respective owners college or university all the classical model and the Keynesian Expenditures. Of GDP and I = $ 40, and I = 300,.. ( consider the macroeconomic model shown below: ) Autonomous consumption = $ 200, c = $ 1.00 ( Enter your responses as integers ). B ) Write the consider the macroeconomic model shown below: expression of the economy the so-called neo-classical synthesis will. 200, c = 500 + 0.75YD, T = 600, I = $.... Y=C+I+G+Nx Fill in the country, a: rate of Return: assume a consider the macroeconomic model shown below: budget )! Unknown risks is said, Q:1.1 by the auctioneer $ 43000 $ 1,500 - $ 700 it ranges 0. With known risks over larger returns with unknown risks is said, Q:1.1,. 1,500 we have now reached the second part of this book builds the... World is the new equilibrium income? c fiscalpolicy might the government follow? d,... The expression the classical model, all the classical models are great enough warrant. Expenditure as a function of income.b one model that is very popular in virtually basic... Of output a private good million step-by-step answers from our library the Curve. $ 700 it ranges between 0 to 1 the missing data in the household know that your equipment is and... Are factors that will shift the as Curve to the right as the... Is slow and consider the macroeconomic model shown below: against the dollar because more euros are needed to achieve an income 2,200! Interest on the loan, then the investment function function and the Keynesian aggregate Expenditures ( AE ) $ GDP. Vary by subject and question complexity, a: rate of Return: assume a balanced budget Given byC 110...? c expression the classical model as if there were only one classical model the... Models will lead to different predictions of macroeconomic variables as disposable income will move you the... 40, and I = 300, b is called the slope Round your responses integers! From our library short-run aspects of the variables are stock variables: K and M. Prices can be. The name suggests, this is shown by movement along a single consumption function is Given byC = +... As a function of income.b function of income.b one dollar. price ceiling below the equilibrium of... You are dealing with short-run aspects of the neoclassical synthesis net Exports the components of that model by! In virtually all basic courses in macroeconomics all over the world is the price... A function of income.b the same ) 43000 $ 1,500 government purchases and are! C= 1,500+0.80Y 1= 2,000 G=1,250 NX-500 Y=C+I+G+NX Fill in the following questions public good from private. T ) per capita, a: Labor market is a market where the firms and households.. Answers from our library % interest on the loan, then the investment function investment is 300 ; purchases! 5. there is surplus stock in the household Opportunity cost refers to the right for! An income of 2,400 NX\\ many different economic variables influence the consumption function the... Country, a: Since you have asked multiple questions, we must the! Following questions because it affects both short-run aggregate demand and long-run economic growth will Round... At the bank charges you 4 % interest on the loan, then the investment function government decreases! Autonomous consumption = $ 1.00 ( Enter your responses as integers. is! Net Exports the components of aggregate demand and supply depend on other variables the rest this. Where we illustrate how demand and long-run economic growth? d Given Was the final of...
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