Assume that equilibrium GDP (Y) is 5,000. Consumption (C) is given by the equation C = 500+ 0.6 (Y-T). Taxes (T) are equal to 600. Government spending is equal to 1,000. Investment is given by the equation I=2,160 - 100 r, where r is the real interest rate, in percent. In this case, the equilibrium real interest rate is: 5 percent. 8 percent. 10 percent. 13 percent.
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- Q.2) Assume that GDP (Y) is 6,000. Consumption (C). is given by the equation C = 600 + 0.6(Y – T). Investment (I) is given by the equation I= 2,000 – 100r, where r is the real rate of interest in percent. Taxes (T) are 500 and government spending (G) is also 500. What are the equilibrium values of C, I, and r? la. b. What are the values of private saving, public saving, and national saving?Assume that GDP (Y) is 6,000. Consumption (C) is given by the equation C= 600+ 0.6(Y- T). Investment (I) is given by the equation I= 2,000 – 100r, where r is the real rate of interest in percent. Taxes (T) are 500 and government spending (G) is also 500. What are the equilibrium values of C, I, and r? What are the values of private saving, public saving, and national saving?Assume that GDP (Y) = 5,000 Consumption: C = 1,300+(0.4(Y-T)) - 240 r; where r is the real interest rate. Investment (1) is: /= 1,800 - 240 r, Taxes (7): T=250 Government spending (G): G= 1,800 a. What are the equilibrium values of C, Number I, Number and r Number b. What are the values of private saving Number public saving, Number and national saving Number
- Assume that GDP ( y) is 6.000. Consumption (C) is given by the equation C= 600 + 06(Y-T). Investment (I )is given by the equation I=2,000- 100r, where r is the real rate of interest in percent. Taxes (T) are government spending (G) is also 500 a. What are the equilibrium values of C, I, and r? b) What are the values of private saving, public saving, and national saving? ·Question A.2: Equilibrium in the goods market The consumption (Ca) and investment (Ia) functions of this economy are: Ca = 10 + 0.8(Y – T) – 40r and %3| Ia = 24 – 50r, where Y = GDP, T = taxes and r is the real rate of interest. %3D a) Government spending (G) is 25 and the budget is balanced. If the real rate of interest is 10%, what is the level of GDP (Y)? Find as well the level of consumption and investment and make sure that they add up to the level of GDP that you found.Assume that GDP (Y ) is 5,000 in a closed economy. Consumption (C) is given by the equationC = 1,200 + 0.6(Y −T)−100r, where r is the real interest rate, in percent. Investment (I) is givenby the equation I = 2,000 − 200r. Taxes (T) are 1,000, and government spending (G) is 1,500.(a) What are the equilibrium values of C, I, and r? (b) What are the values of private saving, public saving, and national saving? (c) For the given consumption function, what does the relationship between consumption and theinterest rate imply about the saving schedule?
- Suppose the incoming Biden administration permanently increases taxes and government purchases by equal amounts. 1)What will be the impact (if any) on output in the short run? 2)What will be the impact on the economy’s normal real interest rate (r*) and normal investment (I*, which is the same as normal saving, S*)?Please calculate level of GDP in equilibrium, consumption and savings level if you know that: I (investment) = 300 Ca (Autonomous Consumption) = 100 MPS (Marginal Propensity to Save) = 0,1 G (Government Expenditures) = 300 T (net taxe rate) = 0,2Assume that GDP (Y) is 6,500, which is also the full employment level of real GDP. Consumption (C) is given by C = 750 + 0.75(Y – T). Investment (I) is given by the equation I = 2000 – 200r, where r is the rate of interest in percent. Taxes (T) are 500 and government spending (G) is 500. The world interest rate (r*) is equal to 4 percent. Use the data above to calculate: Consumption and National Saving= Assuming domestic firms can borrow or lend as much as they want at the world rate of interest, Investment = Therefore, net foreign investment = %3D %3D and net exports = Do these numbers imply that this country is a net lender or a net debtor? Do these numbers imply that this country has a trade surplus or a trade deficit? If government uses an expansionary fiscal policy, will the national saving function shift right or left?
- In a closed economy, the consumption function is C = 80 + 0.8YD − 20r, where YD is disposable income, taxes T x = 200 and transfers are T r = 100. The investment function is I = 550 − 130r. Output is Y = 1000. Here the real interest rate is measured in percentage points (e.g. for r = 5% use 5 and not 0.05). (A) Find net taxes T and government spending G if the government budget is balanced. (B) Derive the total savings function S(r). Do savings depend on the interest rate? If yes, positively or negatively? Why could that happen? (C) Find the equilibrium on the loanable funds market: find, at equilibrium, r, S and I. (D) The government raises its spending by 150 and finances this by borrowing. Find the new equilibrium. Does the crowding out effect takes place? If yes, describe it in detail: what crowds out what. If not, explain why. (E) Instead, the government raises its spending by the same 150 and finances this by raising taxes by an equal amount (to keep the budget…Assume that the economy is initially at its equilibrium level of GDP (Y). Assume that Ip, G, T and Nx are constant numbers. If planned investment decreases by 20, government spending increases by 30, and taxes increase by 10, what is the change in the equilibrium level of GDP (Y)In a closed economy, the consumption function is C = 80 + 0.8YD − 20r, where YD is disposable income, taxes T x = 200 and transfers are T r = 100. The investment function is I = 550 − 130r. Output is Y = 1000. Here the real interest rate is measured in percentage points (e.g. for r = 5% use 5 and not 0.05). (D) The government raises its spending by 150 and finances this by borrowing. Find the new equilibrium. Does the crowding out effect takes place? If yes, describe it in detail: what crowds out what. If not, explain why. (E) Instead, the government raises its spending by the same 150 and finances this by raising taxes by an equal amount (to keep the budget balanced). Find the new equilibrium. Does the crowding out effect takes place? If yes, describe it in detail: what crowds out what. If not, explain why. (F) Draw the loanable funds market diagram. Show the initial equilibrium and the two equilibria under the two fiscal policies.