Equations for C, I, G, and NX are given below. If the equilibrium level of GDP is $32,000, what will the new equilibrium level of GDP be if government spending increases to 2,500? C = 5,000 + (MPC)Y I = 1,500 G = 2,000 NX = -500
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Equations for C, I, G, and NX are given below. If the equilibrium level of
C = 5,000 + (MPC)Y
I = 1,500
G = 2,000
NX = -500
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- Suppose that the consumer’s consumption demand function is given by Cd = 0.8(Y−T)+10. Investment is Id = 20, government expenditure is G = 10, and tax is T = 10. What is the equilibrium GDP (income)? Suppose that government expenditure increases by 10 units while tax is unchanged. How will GDP change? What is the multiplier? Suppose that government expenditure increases by 10 units while tax also increases by 10 units. How will GDP change? What is the multiplier?Consider an economy described by the following equations: C = 300 + 0.90 (Y – T) (Consumption) I = $200 (Investment) G = $300 (Government spending) T = $200 (Taxes) Determine the equilibrium level of national income. Suppose government spending increases to $400. What is the new level of income? What is the government spending multiplier? Suppose taxes increase to $300. What is the new level of income? What is the government tax multiplier? Based on your answers to (b) and (c), does the balanced budget multiplier theorem hold?Suppose an economy is described by the following equations: Y = C + I + G + X – M C = 14 + 0.60Yd I = 20 G = 20 X = 15 M = 5 +0.1Y T = 20 + 0.4Y Where Y is domestic income Yd is private disposable income C is aggregate consumption spending T is government tax revenue I is investment spending G is government spending E represents exports M represents imports of goods and services. (a) If the equilibrium national income is less than the full-employment level of income by N$100, what should be the increase in government spending or in exports to attain the full-employment level of income? (b) With a help of a diagram explain and discuss life cycle hypothesis.
- Suppose an economy is described by the following equations: Y = C + I + G + X – M C = 14 + 0.60Yd I = 20 G = 20 X = 15 M = 5 +0.1Y T = 20 + 0.4Y Where Y is domestic income Yd is private disposable income C is aggregate consumption spending T is government tax revenue I is investment spending G is government spending E represents exports M represents imports of goods and services. (a) Find out the equilibrium value of income. (b) What is the value of export multiplier?C = 450 + 0.4Y I = 350G = 150X = 70Z = 35 + 0.1Y T = 0.15YYf = 1550Calculate the tax revenue to the government of this country when the economy (2) remains in equilibrium.Calculate what the new equilibrium income should be if the government of this (6) country decides to cancel all taxes, implying the tax rate would now be 0%.Before the government decreased the tax rate, how much of government spending was required to bring the economy to full employment?If C=20 I= 30 G=10 NX=-15 MPC=2/3 T= 30% T=0.3Y What is the equilibrium level of output Y for which national income equal total spending
- Our economist estimate that citizens in our country have an MPC of 0.90. To increase GDP by $1,000, how much should we increase government spending?Suppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy, government spending (G) increases by $300, what will happen to Total Spending? Show your work不 Fill in the missing values in the following table. Assume that the value of the MPC does not change as real GDP changes and that there are zero taxes. (Enter all values as whole numbers.) Real GDP () Consumption (C) Planned Investment (/) Government Purchases (G) Net Exports (NX) $15,000 $10,500 $1,500 $1,300 - $375 $16,000 $11,200 $1,500 1,300 - $375 $17,000 $1,500 1,300 - $375 $18,000 $1,500 1,300 - $375 $19,000 $ $1,500 1,300 - $375
- The aggregate demand function: yad =C+1+G₁ = 500+ 0.75Y is plotted on the graph to the right. The graph also shows the 45° line where aggregate output Y equals aggregate demand yad for all points. What happens to aggregate output if government spending rises by 100? The equilibrium level of output rises by $ billion. (Round your response to the nearest billion.) Consumption Expenditure, C ($ billions) 3000- 2800- 2600- 2400- 2200- 2000- 1800- 1600- 1400- 1200- 1000- 800- 600- 400- 200- 0- 0 yad =C+I+G₁ = 500 +0.75Y Y = yad 45° 400 800 1200 1600 2000 2400 2800 Disposable Income ($ billions)Given the necessary increase in GDP of $360 and the MPC of 0.70, how much should we reduce taxes to get GDP to its natural rate?Fill in the missing values in the following table. Assume that the value of the MPC does not change as real GDP changes and that there are zero taxes. (Enter all values as integers.) Real GDP (Y) Consumption (C) Planned Investment (1) Government Purchases (G) Net Exports (NX) $11,000 - $275 $12,000 - $275 $13,000 - $275 $14,000 - $275 $15,000 - $275 Now use the table to find aggregate expenditure and the unplanned change in inventories. Real GDP (Y) $11,000 $12,000 $5,500 $6,000 $ Consumption (C) $5,500 $6,000 Planned Investment (1) $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 $1,100 Government Purchases (G) $1,200 1,200 Net Exports (NX) - $275 - $275 $1,200 1,200 1,200 1,200 1,200 Planned Aggregate Expenditure (AE) $ Unplanned Change in Inventories
