Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 4, Problem 9NP
a)
To determine
The consumption and saving in each period, assuming no borrowing constraints and the result of the situation when the consumer faces a borrowing constraint that prevents her from borrowing.
b)
To determine
The presence of borrowing constraint is the reason behind the lower consumption in all three periods of the consumer’s life than it would be if no borrowing constraints applied.
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Income (Billions)
Refer to the above figure. If the relevant saving schedule were constructed:
1) its slope would be 1/2.
2) it would slope downward and to the right.
3) saving would be minus $20 billion at the zero level of income.
4) aggregate saving would be $60 at the $60 billion level of income.
Consumption (Billions)
2. Suppose Economist in England, a closed economy,
have collected the following information about the
economy for a particular year:
GDP equals 10.000
Consumption equals 6.000
Tax revenue equals 1.500
Government purchases equals 1.700
The economist also estimate that the investment
function is
I = 3.300 – 100r
Where r is the country's real interest rate,
expressed as a percentage. Calculate private saving,
public saving, national saving, investment, and the
equilibrum interest rate.
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.
Chapter 4 Solutions
Macroeconomics
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 1NPCh. 4 - Prob. 2NPCh. 4 - Prob. 3NPCh. 4 - Prob. 4NPCh. 4 - Prob. 5NPCh. 4 - Prob. 6NPCh. 4 - Prob. 7NPCh. 4 - Prob. 8NPCh. 4 - Prob. 9NPCh. 4 - Prob. 1APCh. 4 - Prob. 2APCh. 4 - Prob. 3APCh. 4 - Prob. 4APCh. 4 - Prob. 5APCh. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Prob. 5WWMDCh. 4 - Prob. 6WWMD
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