Suppose a closed economy has an aggregate consumption function given by C = 300 + 0.75Yd and generates $3000 output and income in equilibrium. Suppose also that the government collects a lump-sum tax of 350. How much will the private sector be saving total in equilibrium? (round your answer to the nearest whole value)
Q: Suppose that autonomous consumption (a) is 300, private investment spending (I) is 420, government…
A: We know, from the fundamental macroeconomic identity, Y = C(Y - T) + I + G Where Y represents the…
Q: Suppose that the level of GDP increased by $300 billion in a private closed economy where the…
A: Answer: Given, Change in GDP ∆GDP=$300MPC (marginal propensity to consume)=0.9Change in aggregate…
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A: Marginal propensity to consume is the proportion of change in income spent on consumption.Marginal…
Q: Suppose that the marginal propensity to consume is dC dy = 0.8 − e−0.2y (in billions of…
A: Answer - Given in the question - dC/dY = 0.8 − e−0.2y C0 = $7.5 billion when disposible income is…
Q: The aggregate consumption function is C=1,000 + 0.9Yd. If income is $3,600 and net taxes are $600,…
A: Given: C=1000+0.9YdY=3600t=600
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A: The equilibrium level of output and income is the point where the aggregate expenditure is equal to…
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A: A negative output gap also known as recessionary output gap is when the long run output exceeds the…
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A: According to the question given that the the level of autonomous consumption $9 billion and marginal…
Q: Assume that the consumption function is given by C = 150 + 0.85(Y – T) and the tax function is given…
A: Given; Consumption Function; (C)=150+0.85(Y-T) Tax function (T)= t0+t1Y where; C= consumption Y=…
Q: f the consumption function is C= 800 +0.6(Y-T), output, Y = $4,600 and net taxes, T, = $100, then…
A: here we calculate the consumption by using the consumption function so the calculation of the…
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A: In short, consumption equation C = C + bY shows that consumption (C) at a given level of income (Y)…
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A: Gross Domestic Product (GDP) is the value of all the goods and services produced domestically in a…
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A: According to the national income identity, gross domestic product is calculated by adding consumer…
Q: Suppose that autonomous consumption is 2,190, government purchases are 590, taxes are 0, planned…
A: An autonomous spending depicts the parts of an economy's total use that are not influenced by that…
Q: You are given the following information about a closed economy with no government: Consumption =…
A: Autonomous spending means that it is not dependent on the level of income(Y). Therefore, we put it…
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A: Marginal Propensity to Save (MPS) is the amount of money an individual saves while disposable income…
Q: Assume potential GDP is 3,500 and actual GDP is 3,050. If the consumption function is C=400+0.2Yd ,…
A: The aggregated, economy consumption function is mathematically represented as: C = a + b (Y - T) .…
Q: Consider an economy with the following consumption function: C = 400 + 0.60YD, and investment…
A: Consumption function: C=400+0.60YD .... (1) I=600 Marginal propensity to consume increases by…
Q: In a private closed economy where MPC= 0.8, if consumers reduce their spending by $20 billion and…
A: The macroeconomic equilibrium in an economy is determined by the aggregate demand and aggregate…
Q: Consider an economy in which autonomous consumption, planned autonomous investment, autonomous…
A: Given, Autonomous consumer spending =$3,000 Investment = Ip = $5,000 Government spending = G =…
Q: Suppose a closed economy with no government spending or taxing is capable of producing an output of…
A: Given, Output = $1700 Autonomous Consumption = $140 Intended Investment = $170 MPC = 0.50
Q: A flatter aggregate consumption function, if plotted on a graph with output on the horizontal axis…
A: A marginal propensity to consume refers to the slope of the aggregate consumption function. It…
Q: Suppose that the marginal propensity to save is dS dy = 0.21 (in billions of dollars) and…
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Q: What happens to aggregate output if both taxes and government spending are lowered by $300 billion…
A: A multiplier is a proportionality factor that measures how much endogenous variable changes in…
Q: Suppose that out of the original 100 of government spending, 33 will be recycled back into purchases…
A: The aggregate expenditure in an economy is a function of consumption expenditure, investment…
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Q: Suppose the government reduces taxes by 50,000,000, that there is no crowding out, and that marginal…
A: Initially, due to the tax cut of 50,000,000 the spendings of people rose by the MPC (given as 0.9).…
Q: Suppose that the marginal propensity to save is dS dy = 0.93 − ln(y + 1) y + 1 (in billions…
A: Answer: Given: Marginal propensity to savedsdy=0.93-lny+1y+1Marginal propensity to…
Q: If disposable income is 85 per cent of national income, the marginal propensity to consume (out of…
A: The measure which depicts the degree to which a consumer would in turn be spending or saving with…
Q: Suppose a closed economy has an intended investment of 100 and an aggregate consumption function…
A: Given information: C=250 + 0.75Yd -----> Consumption function I = 100 ------------> Investment…
Q: Assume that the marginal propensity to consume is 0.75. The government wishes to increase the…
A: Given, Marginal propensity to consume (MPC) = 0.75 Recessionary output Gap = $100 billion Since the…
Q: uppose output and income is equal to 16100, the marginal propensity to consume is 0.65, and…
A: Consumption is the sum of Autonomous consumption and induced consumption. Autonomous consumption is…
Q: Consider a closed economy with a government. Consumption is given by C = 1,000 + 0.8Yd Further, t…
A: Aggregate output is the sum of consumption, investment, government spending and net exports in an…
Q: Suppose the consumption function is given by C(Y)=60+0.8(Y-T) where Y represents output and T stands…
A: Given Information: Consumption function = C(Y)=60+0.8(Y-T) Investment ( I ) = 400 level of…
Q: Suppose that autonomous consumption is 1,500, government purchases are 500, planned investment…
A: We can find the equilibrium GDP by the following formula: Y = C + I + G + NX where, Y is…
Q: Question 24 In the definition of marginal propensity to consume, marginal refers to the amount of…
A: Consumption function is a sum of autonomous and induced consumption. Autonomous consumption is…
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Q: As shown in Exhibit 2, dissaving occurs: Group of answer choices at $5 trillion. between 0 and $4…
A: The 45° line is the GDP or the total output line. Savings is the portion of income that is not…
Q: Suppose a closed economy has an aggregate consumption function given by C = 100 + 0.75Yd and…
A: The gross domestic product is the market value of final goods and services produced within the…
Q: Assuming that the MPC is 0.80, calculate the value of the government expenditures multiplier.
A: Given:- MPC=0.80 To calculate:- Government expenditure multiplier=? Please find the image attached…
Q: In a private closed economy where MPC = 0.90, if consumers reduce their spending by $5 billion and…
A: Given the MPC = 0.90 Reduction in consumption = $5 billion Decrease in investment = $4 billion
Q: Suppose a closed economy with no government spending or taxing is capable of producing an output of…
A: An economy reaches equilibrium at that output level where its aggregate demand becomes equal to…
Q: If an economy is in equilibrium when national income is $1000, and the level of autonomous…
A: The marginal propensity to consume is a metric that quantifies induced consumption, the concept that…
Q: Suppose a closed economy with no government spending or taxing is capable of producing an output of…
A: Since you have asked multiple question, we will solve the first question for you. If you want any…
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- 8. The income-expenditure model Consider a small economy that is dlosed to trade, so its net exports are equal to zero. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, 1 is investment, G is government purchases, and T stands for net taxes: C - 40 + 0.5 x (Y-T) Suppose G- $315 billion, I - $50 billion, and T- $10 billion. Given the consumption function and the fact that for a closed economy total expenditure can be calculated as Y = C+1+G, the equilibrium output level is equal to s billion. Suppose the government purchases are reduced by $200 billion. The new equilibrium level of output will be equal to Based on the effect of the change in government purchases on equilibrium output, you can tell that this economy's spending multiplier is equal toExplain two effect of public expenditure on the investment??The cost of rebuilding the Philippines after typhoon Haiyan could reach USD 5.8bn”, a senior official has said. Assume the government of Australia Department of Foreign Affairs and Trade provided a grant of USD 5.8 billion. Also assume that despite the hardships the Philippine families experienced, 15% was the beneficiary savings from the Australian grant. Further, assume all other factors remain constant.a. Calculate the total effect of the spending multiplier of the Australian government grant on the Philippine economy GDP growth. b. Examine the overall multiplier effect of the USD5.8 billion grant on the Philippine economy. Answer asap n correctly with proper typed explanation
- GDP $0 1 2 Consumption $0.5 1.0 1.5 2.0 2.5 3.0 3.5 4.0 D 8 4.5 As shown in Exhibit 9-1, if equilibrium GDP is $5 trillion, then the total of investment, government spending, and net exports is: 8 4.5 As shown in Exhibit 9-1, if equilibrium GDP is $5 trillion, then the total of investme O $1 trillion. $2 trillion. O $3 trillion. O $4 trillion. $6 trillion. 4 Aggregate Expenditures 6 Unplanned inventoryFill in the aggregate saving column in the following table. (Include a minus sign if necessary.) Aggregate Income, Y $0 100 200 300 400 500 600 Aggregate Consumption, C $200 250 300 350 400 450 500 The value of the MPC is one decimal place.) T Aggregate Saving, S $-200 150 100 50 0 50 100 (Round your response to CXIE DE Aggregate consumption, C Aggregate saving, S 700- 600- 500- 400 300- 200 100- 0 -100- -200- 300- -400- 100 200 300 400 500 Aggregate income, Y 600. Suppose an economy is represented by the following equations.Consumption function C = 100 + 0.8YdPlanned investment I = 38Government spending G = 75Exports EX = 25Imports IM = 0.05YdAutonomous Taxes T = 40Planned aggregate expenditure AE = C + I + G + (EX - IM)a. By using the above information calculate the equilibrium level of income for thiseconomy. b. Calculate the value of expenditure multiplier. c. Suppose that government spending is increased by 5, what will happen to theequilibrium income level?
- Given the following consumption function, C = 400 + 0.75YD,where C= consumption expenditure, YD = disposable income, Investment= $1200, Government spending = $1600,Exports = $500, Imports = $600, Taxes = $1200 and Potential GDP = $9000Choose corrcct optiona) Aactual output is less than potential outputb) actual output is zeroc) actual output is equal to potential outputd) actual output is higher than potential outputPlease see attachment Answer neatly Show all your work. Based on the above diagram: 1. Calculate MPC? 2. If Private Investment increases by 100, calculate the new level of NI. 3. If full-employment NI is at 3000, by how much should Government spending change? 4. What is the new NI, If 1/2 of those government expenditures are financed through taxes?40. If the expenditure mutiplier in a closed economy without govemment activites equais 4 what is the MPC in ths economy? a. 025 b. 0.20 C. 0.75 d. 0.80 Use the information below to answer questions 41-43. In an economy at zero disposable income consumption is 1200 milion. The marginal propensity to save in this economy is 0.25 41. What is the consumption function for this economy? a. C 1200 0.25Yd b. C 1200 0.75YA C C-0+0.75Yd d. C=-1200 25Yda 42.If Yd = 6000 milion, what is consumption expenditure in this economy? a. 6000 million b. 5700 million e. 7200 millon d. 5200 million 43. What is saving in this economy at Yd= 6000 milion? a -1200 b. 300 C. 1200 d. 300 44. An increase in minimum wages unmatched by high productivity leads to a. demand pull inflation b. cost push inflation e. imported inflation d. creeping infation 45 Full employment occurs when a. actual output exceeds potential output b. actual output is less than potential output C. actual output is equal to potential output…
- Consider a closed economy. The profits of private corporations constitute a fraction ?of national income. These profits are subject to corporate tax and a fraction ? of the net profits is distributed to owners. The remaining profits are invested in theeconomy. To encourage investment, the government proposes to cut the corporation tax. The corporation tax is proportional and so is the regular tax but the rates are notnecessarily the same.Analyse the effects of the government proposal assuming that wages and pricesare flexible. Will there be any ambiguity about the results?In an economy, consumers spend 800 million regardless of their level of disposable income. In addition, they spend 75% of their yearly disposable income. * Investment is fixed at 250 million, Gvt expenditures are 120 million, net taxes are 100 million, exports are 170 million. Imports are 15% of the level of disposable income. Q, what is this economies equilibrium level of output Q how much would net export be when this economy is at equilibrium outputthe following macro mo det consumptron : c • C' +cYq and Ya = do posable income Desine d Investment: = I' +jY Government Expenditure s. G =G'+gy Exports = EX : X' IM =F' Imports Taxes : T:T't tY a) what is the equation for y" for this economy? b) Derive for this each of the following multipliers economy. ) Ke' 5) Kpi 2) k 6) Kx' 3) KG' 7) Kg8 "BB 4) Kpi 2 why Might one that the is argue 1 probably a 2 vavia b le g number ? hegathe
