Consider the following short-run IS-LM model with income taxation. The economy is described by equations (1) through (6): (1) C= 500+ 0.75(Y-T) (2) T = 800 (3) G = 550 (4) 1 700 30 r (5) Y=C+I+G (6) M/P = 0.6Y - 60r where the nominal money supply M-1200 and the price level is P = 2. Then, in the short run, the equilibrium output for the economy is given by (approximately): Y*=2524.14 Y=2636.80 Y=2245.00 Y*=1900.00
Q: What is interesting about the concept of externalities. Explain the benefits of obtaining knowledge…
A: An externality is a cost or benefit a producer generates but does not personally bear or receive. An…
Q: 4. A business generates an annual income of$50,000and a salvage value of$500,000in 10 years. How…
A: Present value is the value of investment in today's dollar. Future value is the value of…
Q: If the Treasury prints a 100 dollar banknote which has a unit cost of $0.15 or 15 cents, seigniorage…
A: There can be four forms of money: Fiat money Fiduciary money Full Bodied money Credit money Fiat…
Q: v) Illustrate your answer to (iii) on a graph, include your indifference curve, the budget…
A: Given Pizzas and soda is consumed in fixed proportion as 3 pieces of pizzas with 2 cups of soda.…
Q: What is a two-part tariff? Why do firms sometimes use them? What is an example of a firm that uses a…
A: A two-part tariff (TPT) is a method of valuing where the price of a good or service is divided into…
Q: 1) Complete the table. Price 18 17 16 15 14 13 12 Quantity Total Marginal Fixed Demanded Revenue…
A: Since you have asked multiple questions, we will solve the first question for you. If you want any…
Q: ason, a high-school student, mows lawns for families in his neighborhood. The going rate is $12 for…
A: A perfectly competitive market is one where there are many buyers and sellers and each of them has…
Q: From the equation of exchange, if both real income (Y) and the quantity of money (M) double and the…
A: The quantity theory of money:- According to the American Economist Irving Fisher, there is a…
Q: Suppose that the government imposes a tax on the market. D is the demand curve before tax, S is the…
A: Before tax equilibrium occurs at the intersection of demand and supply curves and after tax…
Q: 3. An income tax. Suppose the U.S. Congress decides to levy an income tax on both wage income and…
A: Comprehending the Solow Model depends on understanding the steady-state. Investment and depreciation…
Q: Consider a hypothetical situation at the Mitengo Market in Ndola where there are 1000 identical…
A: The total amount of a good that is desired by everyone at each price is represented by the market…
Q: Firm 1 Silence Disclosure Silence -200, -200 0,-590 Firm 2 Disclosure -590, 0 -450, 450 fine (a…
A: Given the game table for firm 1 and firm 2: Firm 2 Silence Disclosure Firm 1 Silence -200,…
Q: Jack received a $4,000 raise this year; this increased his salary as an associate television…
A: Initial Salary = $35,500 New Salary = $39,500 Increase in salary = $4,000 Percentage increase =…
Q: In the textbook production model, the productivity parameter enters the production function with an…
A: Since the question you have posted consists of multiple questions, we will answer the first question…
Q: 5. Wireless high-speed internet in provided for free at an airport in a smaller city (like…
A: Kindes of goods: In public economics, one studies the various kinds of goods in the economy. The…
Q: A simplified version of Leontief's analysis of the 1947 American economy has the following…
A:
Q: A man borrowed some money from a private at 5 % simple interest per annum. He landed this money to…
A: The simple interest refers to an interest paid over a defined period is a fixed percentage of the…
Q: 9. A study finds that leaf blowers make too much noise, so the government imposes a $10 tax on the…
A: Since you have asked multiple subparts, we would be answering the first three for you. To get the…
Q: Which of the following would cause a financial account (FA) surplus? a. the sale of heavy trucks…
A: When it comes to financial assets, a financial account is a part of a nation's balance of payments…
Q: i need this in words not handwritten just Rewrite this
A: As asked, wil be typing the solution.
Q: Explain as completely as you can what an economist means by supply?
A: The quantity of a thing that is on hand for consumption or purchase is known as the supply. The…
Q: The total/aggregate market demand for rubber erasers can be segmented into two components. The first…
A: The demand curve shows the inverse relationship between price and quantity demanded. Given, Demand…
Q: Transfer payments are included in the GDP calculation. [T or F]?
A: Governmental transfers to people include benefits like Social Security. Since transfers do not…
Q: Explain how providing education to all children in grades K-12 provides external benefits to…
A: K-12, a term utilized in education and educational technology in the US, Canada, and potentially…
Q: Until recently, hamburgers at the city sports arena cost $2.80 each. The food concessionaire sold an…
A: The demand function shows the functional connection between the Quantity demanded of a commodity and…
Q: It is possible for everyone to enjoy a comparative advantage in a task of their choosing. Why?
A: Comparative advantage refers to the ability to produce goods and services at a lower opportunity…
Q: A shift in the demand curve for bonds occurs when the quantity demanded changes at each given…
A: In the market for bonds, the equilibrium price and quantity is determined by the demand and supply…
Q: Draw a long run average cost curve that, at different quantities, exhibits economies of scale,…
A: Average cost The cost per unit produced inside a production run is called the average cost. It…
Q: Consider a geometric series of cash flows that begins at time 5 with a cash flow of $5,000. Cash…
A: At Year 5, Cash Flow = 5,000 series increase by 7% total 9 cash Flows in gradient series FV at Year…
Q: 4. The Laffer curve Government-imposed taxes cause reductions in the activity that is being taxed,…
A: Laffer curve shows the relationship between tax and tax revenue. It shows at what tax per unit…
Q: 130 ve beenbew suc 4. Four roommates are planning to spend the weekend in their dorm suite watching…
A: The question contains a table which shows the willingness to pay for each film by each of the…
Q: In 2012, the Scottish government introduced a 50 pence minimum price for a unit of alcohol. [One…
A: The minimum price at which one standard drink can be offered for sale or sold is the minimum floor…
Q: Stockholders are the owners of a corporation and the two types of stocks are: (Choose two) A.…
A: Any individual, company, or institution that holds at least one share of a company's stock or unit…
Q: area representing total consumer surplus after the tax. Then, use the purple point (diamond symbol)…
A: The point of intersection of the demand and supply curve is called the equilibrium point. The price…
Q: Before 1700 per capita GDP across countries differed by a factor of: a. 1 d. 50 b. 2-3 e. C. 10 100.…
A: Introduction GDP is the total goods and services produced in an economy at market prices. Economic…
Q: It’s Sept. 2015. Division A of U.S. Toys Inc. owes 1.5 mil. C$ to a Canadian firm to be paid in…
A: The exchange rate is the price of a nation's money for another country's money. An exchange rate is…
Q: You are offered a 15-year investment and ask to select your preferred terms of interest which of the…
A: In this question, we will convert 8% interest rate compounding (continuously, annually,…
Q: What is meant by a change in supply, and change in quantity supplied?
A: The idea of supply is used in economics to estimate the volume of a good or service produced by…
Q: 6. The principle of transition dynamics can be summarized as: a. the further below its steady state…
A: 1) The transition dynamics idea is applied in the long-term Solow model. This theory states that any…
Q: 7 Derive Marshallian/Ordinary Demand for both x utility functions a) U(x, y) = min[1x, 6y] 。) U(x,…
A: utility function represents the relationship between utility and consumption of goods.
Q: Explain the statement "People resond to incentives and disincentives" in relation to the demand…
A: Anything that encourages a consumer to purchase a product is considered an incentive.
Q: The first cost of a machine is P1.8M with a salvage value of P300,000 at the end of its life of 5…
A: The double declining balance (DDB) depreciation technique refers to a method of accounting that…
Q: ) Illustrate your answer to (iii) on a graph, include your indifference curve, the budget…
A: Given Price of pizza pz=5.00 Price of soda: pd=2.00 Consumer income I=20 per week The consumer is…
Q: This is the second time asking this because last person did not answer the first ten and last ten…
A: Missiles vs. Milk (millions of gallons) 0 4010 3020…
Q: Two mutually exclusive alternatives are available. If the interest is 15%, select the best…
A: Given, Two Alternatives : Alternative 1 and Alternative 2Rate of interest : 15% i.e. 0.15
Q: How many missing jobs (a FRED question): Suppose the U.S.unemployment rate int the most recent month…
A: The most popular measure for assessing the state of the labor market is the unemployment rate.…
Q: Developed economies are less prone to banking crises than developing or less developed economies.…
A: When talking about banking crisis, it can be said that it is the situation when banks are running…
Q: With the latest NZ inflation rate of 7.2% at a level much higher than expected, the RBNZ is expected…
A: In this year during third quarter annual inflation ran at 7.2%; and primary drivers of inflation…
Q: How did you come up with 0.13587 from (A/P, 6%,35)? Also with 3.46511 from (P/A, 6%, 4)?
A: The present worth of an annuity due describes to us the current worth of a series of expected…
Q: Maria was working for an employer and lost her job two months ago. She has not looked for a…
A: Unemployment refers to the condition of one who is capable of working, and actively looking for…
Step by step
Solved in 3 steps with 3 images
- Given: C = 100 + 0.65Yd (where Yd = Y-T) I = 120-400i G = 200 T = 20 + 0.2Y Ms/P = 200 Md/P = 50+0.5Y-600i Where: C = Consumption Y = Income I = Investment G = Government spending T = Taxes i = interest rate Ms/P = RealMoney Supply Md/P = Real Demand for Money (a) Derive the IS and LM curves (b) Obtain the equilibrium level of: i. Income ii. and consumptionQuestion 4. (1) As discussed, the IS-LM model can explain the impact of fiscal policy to aggregate output (Y). For the IS curve, government purchase (G) is an endogenous or exogenous variable? How a lower government purchase G would affect Y? How to illustrate the change graphically? (2) For the LM curve, use your language to explain how the supply of real money balance is related to total money supply (M) and the price level (P). For M and P, which one is endogenous or exogenous to the LM model? (3) Use your language to explain how to derive the aggregate demand (AD) curve from the IS- LM model? How the AD curve is sloped and why?Consider an economy with a constant nominal money supply, a constant level of real outout Y= 400, and a constant real interest rate r 10%. Suppose that the income elasticity of money demand is 1.20 and the interest elasticity of money demand is-0.10. a. By what percentage does the equilibrium price level differ from its initial value if output increases to Y 480.00 (and rremaine at 10%)? %AP= (enter your result as a percentage rounded to two decimal places). b. By what percentage does the equilibrium price level differ from its initial value if the real interest increases to r-12.50% (and Y remaina at 400)? %AP (enter your result as a percentage rounded to two decimal placea). c. Suppose that the real interest rate inoreases to re 12.50%. By what percentage would real output have to increase for the equilibrium price level to remain at its initial value? %AY- T(enter your reault an a percentage rounded to two decimal places)
- Suppose that an economy has a constant nominal money supply, a constant level of real output Y = 1500, and a constant real interest rate r = 0.05, and it’s expected rate of inflation is 2%, i.e, πe = .02. Suppose that the income elasticity of money demand is ηY = 0.5 and the interest elasticity of demand ηi = –0.2. (a) Suppose that Y decreases to 1425, r remains constant at 0.05 and there is no change in the expected rate of inflation. What is the percentage change in the equilibrium price level? (b) Suppose that r increases to 0.06 and Y remains at 1500. Assuming that expected inflation remains at πe = .02, what is the percentage change in the equilibrium price level? (c) Suppose that r increases to 0.06. Assuming that πe = .02, what would real output have to be for the equilibrium price level to remain at its initial value?What is says law?Refer to the figure that shows the money demand and supply and investment demand curves. Mp Mso Ms1 Eo M, Mo Quantity of Money (i) Money demand and supply Investment Expenditure (ii) Investment demand Part (i) of the figure shows the money market and the effect of an increase in the supply of money. The corresponding sequence of events in of money at i , leads firms and households to the bond market is as follows: The bonds, which leads to a(n) il the price of bonds and a decrease in the interest rate. O A. excess demand; sell; increase O B. excess demand; sell; decrease O C. excess supply; buy; decrease O D. excess supply; buy; increase Refer to the money demand curve. Given the money demand curve, Mp, an increase in the quantity of money demanded from M, to M, can be caused by O A. an increase in the price level. O B. an increase in the rate of interest. C. a decrease in the price level. O D. a decrease in the rate of interest. 1 * Mp Mo M, Quantity of Money Interest Rate Interest…
- Consider an economy with the following features Consumption, C = 100 + 0.9 Y, 1. Income tax, t=-Y 3 Investment, I= 600-30 i Government expenditure, G = 300 Transaction demand money for M, 0.4Y Speculative demand for money, M,=- 50 i Nominal money supply M = 1040 Price level =2 (where Y,stands for disposable income, and i for rate of interest) Derive the IS and LM equations and fund out the equilibrium levels of income and rate of interest.Consider the following Keynesian economy Desired consumption: c" -220 + 0.6(Y - T)-200r Desired investment: 300 - 300r Taxes: T=20 + 0.2Y Government purchases: G= 152 Net exports: NX 150 -0.08Y -500r Money demand: L0.5Y -200r Money supply: M=936 Full-employment output: Y 1000 In this economy, the real interest rate does not deviate from the foreign interest rate. a. In the general equilibrium (that is, the long run), the value of output is 1000 , the real interest rate is 0.210, consumption is 646, investment is 237, net exports are -35, and the price level is 2.044 (Enter values rountled to three decimal places for the real interest rate and price level, and enter values rounded to integers for all other values.) b. Starting from full employment, govermment purchases are increased by 58, to 210. As a result of this change, in the short run, output becomes 1019. the real interest rate becomes 0.257, the consumption becomes 640, investment becomes 223, and net exports become - 60 (Enter…1) Derive the ISLM model and explain how general equilibrium in the goods and money markets is determined. 2) Explain the effect of contractionary monetary policy in the ISLM model when investment demand is very interest rate elastic using a diagram. 3) Explain the difference of the effect of contractionary fiscal policy between the Keynesian aggregate expenditure model and the ISLM model when the central bank is not targeting an interest rate. 4) Explain under which conditions for the LM schedule, expansionary fiscal policy is most effective in increasing output using a diagram.
- Consider an economy with a constant nominal money supply, a constant level of real output Y=100, and a constant real interest rate r =0.10. Suppose that the income elasticity of money demand is 0.5 and the interest elasticity of money demand is -0.1. A. By what percentage does the equilibrium price level differ from its initial value if output increases to Y=106 (and r remains a 0.10)? B. By what percentage does the equilibrium price level differ from its initial value if the real interest rate increases to r=0.11 (and Y remains at 100)? C. Suppose that the real interest rate increases to r=0.11. What would real output have to be for the equilibrium price level to remain at its initial value? Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.Hi I want the answer as soon as possible Given the following informations Consumption(C)= 800+0.9Y Investment( I)=8000-800r Money Supply(Ms)=28500 Demand for Money(Md)=0.75Y-1500r Find an equation for LM scheduleThe following equations relate to a certain economy, peruse them and answer thefollowing questions.T = 0.75Y (tax rate)L= Y - 100r (Real money demand)M = 300 (Read money supply)C = 200 + 0.25Y d (Consumption function)I = 20 - 10r (Investment function)G = 30 (government purchases) i) Derive equations fro IS and LM curvesii) Determine the rand y pair at which the two markets are clearing iii) Compute the values of C, I and L.