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- Suppose you are given the following information for an economy without government spending, exports, or imports. Cis desired consumption, Iis desired investment, and Y is inoome. Cand i are given by C=400 +06Y 1-300 a. What is the equaion for the aggregate expendture (AE) function? (Round your response for the intercept tem to the nearest whole number and for the siope tem to one decimal place) AE CYThe figure below shows a simple macroeconomic consumption model. The letters N and D indicate curves, the letters T, A, L and Q denote (intersection) points. The "auxiliary triangles" marked in burgundy mean that if the value of the horizontal section shown in them is considered to be 1, the value of the vertical sections is s and r, respectively. It is known that L is 100 and ris 0.75. T 45° A 1 Give the equation of the savings function: S= (use a decimal point and 2 decimals if needed, and write capital letters as an unknown variable) How much is the value of A on the X axis?(Four Sector Model) : The major macro aggregates for an economy are given as follows : Consumption, C = 60 + 0.8Y,(Y,is disposable income) Investment I = 100 – 5i % Interest rate i = 6 Imports Government expenditure, G= 76 M=12+0.2Y Lump-sum Tax, T= 15 Transfer payments, TR = 60 1. Derive the IS curve using the abo ve data Еxports X = 70 2. Calculate equilibrium level of inc ome 3. Calculate foreign trade multiplier
- CThe following equations describe an economy C = 100 + 0.75 Y. I = 50 – 25i where C' is aggregate consumption , Y is disposable income, I is aggre gate investment, Tis taxes, G is go vernment purchases and i is the int erest rate. Derive the IS curve for th T= G= 50 e economy.Economics a) Discuss the determinants of aggregate consumption and aggregate investment. Base onhistorical Australian data, which tends to fluctuate more – investment or consumption? You must also answer why it does this, Data must be sourced. (500 Word count) b) Suppose bad economic stats led investors to be more negative about futureprospects on earnings on investment projects. With the help of diagrams, review theimpact of this change on aggregate consumption and income. Word limit 600Assume that an economy is characterized by the following equations: C= 100 + (2/3XY -T) T= 300 G = 500 1 = 800- (50/3)r M IP 0.5Y- 50r a. Write the numerical IS curve for the economy. b. Write the numerical LM curve for the economy, assuming P=1 and M=1,200. c. Solve for the equilibrium values of Y and r.
- We again assume asimple closed economy with GDP of 100 and:c0(autonomous consumption) = 20c1 (marginal propensity to consume) = 0.6I (investment) = 20.a) Now assume that c0falls by 5 (i.e. 5% of GDP), i.e. for any given level of output,consumption will fall by 5. Show the implied fall in the AD function in yourdiagram and show that output will fall by more than 5.b) Show that the multiplier is equal to 2.5, and hence that, in the new equilibrium,output will have fallen by 12.5 (i.e. by 12.5%)c) How big would the impact be if, say, c1 = 0.4 or c1 = 0.8? Explain the difference.Determine equilibrium levels of income and consumption for the following functions.a.C=20+0.75y,I=20,b.C=50+0.60y,I=30. WhereC&I are consumption and investment respectively in billions of nairaConsider the aggregate expenditure model. Suppose there is an increase in real GDP in the economy. Classify each economic variable as to whether it increases, decreases, or remains unchanged when real GDP increases. Increases Decreases Answer Bank Does not change consumption marginal propensity to consume government spending investment aggregate expenditures net exports imports natural rate of output exports
- Intertemporal substitution of consumption refers to ... the choice of how to divide current spending between two or more goods consumers choice as to how much to consume now and how much to consume in the future whether to financially invest in stocks or bonds how to spend one's time working or taking leisureLinear equations for the consumption and saving schedules take the general form C = a + bY and S = -a + (1 - b)Y, where C, S, and Y are consumption, saving, and national income, respectively. The constant a represents the vertical intercept, and b represents the slope of the consumption schedule.a. Use the following data to substitute numerical values for a and b in the consumption and saving equations. b. What is the economic meaning of b? Of (1 - b)? c. Suppose that the amount of saving that occurs at each level of national income falls by $20 but that the values of b and (1 - b) remain unchanged. Restate the saving and consumption equations for the new numerical values, and cite a factor that might have caused the change.Ts assume that in the model of national economy household consumption is C = 300 + 0.9*DI, companies' gross vestment is Ig = 200, but government expenses are G = 250, while the sum of taxes collected by the government iS -150. Taking into account that disposable income DI =Y-T, calculate: a) Equilibrium level of income Y; b) Calculate the value of Marginal propensity to consume and value of Marginal propensity to save; c) Private consumption at macroeconomic equilibrium%3; d) Develop equation of saving and calculate amount of saving at the point of equilibrium level of income.