- Given: C = 102 + 0.7Y , J = 150 - 100 M_{S} = 300, M_{t} = 0.25Y and M_{s} = 124 - 200 ,. Find: a- The equilibrium level of income and the equilibrium rate of interest, b- The level of C. I, Mr and M_{z} when the economy is equilibrium
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2- Given: C = 102 + 0.7Y , J = 150 - 100 M_{S} = 300, M_{t} = 0.25Y and M_{s} = 124 - 200 ,. Find:
a- The equilibrium level of income and the equilibrium rate of interest,
b- The level of C. I, Mr and M_{z} when the economy is equilibrium
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- 4. An economy has government purchases of 1000. Desired national saving and desired investment are given by gd=200+5000r+0.10Y-0.20G jd=1000-4000r When the full-employment level of output equals 5000, calculate the real interest rate that clears the goods market.a. Assume that the government borrows $4 billion to pay for its increased purchases. Adjust the graph below to reflect this change. Be sure to indicate the new market equilibrium. Interest Rate (percent) 10 9 8 7 2 1 0 Incorrect 0 Market for Loanable Funds E National saving, S(r) 6 2 4 8 10 12 14 Loanable Funds (in billions of dollars) 16 18 Investment, I(r) 20An economy has government purchases of 2000 (G=2,000). Desired national saving and desired investment are given by Sd = 200 + 500Or + (0.1Y) - (0.2G) Id = 1000 - 4000r When the full-employment level of output equals 5000, A. What is the equilibrium real interest rate? B. What is the equilibrium level of desired Investment? c. What is the equilibrium level of consumption?
- 1. The Following equations describe an economy: Y=C+I+G C = 240 +0.5(Y-T) I = 200-10r G = 100 T = 80 (M/P)d=Y-20r M = 1200 P = 4 What are the Equilibrium level of income and the real interest rate.Consider an economy described by the following equations: Y = C +1 + G AND, Y = 20,000; G = 4,000; T = 4,000; C = 1000 + 0.80(Y – T); : I= 2,500 – 120r. national saving AND the equilibrium real interest rate equal: Select one: O a. national saving 3200 AND the equilibrium real interest rate 2.5%. O b. national saving 2200 AND the equilibrium real interest rate 2.5%. O c.national saving 2500,AND the equilibrium real interest rate 2%. O d. national saving 4000 AND the equilibrium real interest rate 1.5%.An economy has full-employment output of 9000, and government purchases are 2000. Desired consumption and desired investment are as follows: Real Interest Desired Desired Rate (%) Consumption Investment 2 6100 1300 6000 1200 4 5900 1100 5 5800 1000 6 5700 900 If the goods market is in equilibrium, what are the values of the real interest rate, desired national saving, and desired investment? r = %. (Enter your answer as a whole number.) (Enter your answer as a whole number.) %3D
- 2.3 An economy shows the following functions, C = 200+ 0.75(Y-T) T=80+ 0.2Y 1 = 200-2000i G = N$300 Mt = 0.5Y M₂ = 200-250i Mz Ms = N$400 Compute the equilibrium income and rate of interest?3. Suppose the incoming Biden administration permanently increases taxes and government purchases by equal amounts. a. What will be the impact (if any) on output in the short run? b. 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*)?Assume an economy with 600 consumers. Each consumer has income in the current period of 70 units and future income of 80 units and pays a lump-sum tax of 10 in the current period and 25 in the future period. The market real interest rate is 12%. Of the 600 consumers, 400 consume 70 units in the future, while 200 consume 20 units in the future. a. Determine each consumer's current consumption and current saving. For the group of consumers that consume 70 units in the future, current consumption is and current saving is For the group of consumers that consume 20 units in the future, current consumption is, and current saving is (Round to two decimal places as needed.)
- 2. Suppose, C=0.8(1-t)Y • t=0.25 •| = 900 – 50i • G=800 a) What is the equation for lIS curve b) What is the effect of increase in govt. expenditure by 100 on the IS equation & IS curve? Show the effect using graphs c)What will happen to the slope of IS curve if Investment becomes more sensitive to interest, say | = 900 – 60i ?Consider an the following equations: Y=C + I +G Y=7,000 G=4000 T=2,000 C=150+0.75(Y-T) I=1,000-50r a. compute private saving, public saving and national saving. b. Calculate the equilibrium interest rate. c. Now suppose the G rises BY 1,000. Compute private saving, public saving, and national saving.1. Consider an economy described as follows: Y = C +I+ G. Y = 8,000. G= 2,500. T= 2,000. C = 1000 + 2/3(Y-T). || I=1,200 - 150i. a. In this economy, compute private saving, public saving, and national saving. b. Find the equilibrium interest rate. c. Now suppose that G is reduced by 600. Compute private saving, public saving, and national saving. d. Find the new equilibrium interest rate.