1.Suppose that the economy is characterized by the following behavioral​ equations:

C​ = 170+0.75YD

I ​= 150

G​ = 100

T​ = 90

What is the equilibrium GDP ​(Y​)? (Round to two decimal​ places.)

 

What is the level of disposable income ​(YD​)?(Round to two decimal​ places.)

 

What is the level of consumption spending ​(C​)? ​(Round to two decimal​ places.)

 

2. Suppose that the economy is characterized by the following behavioral​ equations:

C​ = 130+0.9YD

I​ = 170

G​ = 150

T​ = 100

What does equilibrium output​ Y equal? ​(Round to the nearest​ integer.)

 

What does total demand​ Z equal?(Round to the nearest​ integer.)

Total demand is ▼

 

Total demand is (greater than/ equal to/less than) production.

 

3.Suppose that the economy is characterized by the following behavioral​ equations:

C​ = 160+0.6YD

I ​ = 150

T​ = 100

Assume that government spending ​(​G) is equal to 110

 

What does equilibrium output​ Y equal? ​(Round to the nearest​ integer.)

 

Total demand is (less than/ equal to/ greater than) production.

 

4.The balanced budget multiplier

For both political and macroeconomic​ reasons, governments are often reluctant to run budget deficits.​ Here, we examine whether policy changes in G and T that maintain a balanced budget are macroeconomically neutral. Put another​way, we examine whether it is possible to affect output through changes in G and T so that the government budget remains balanced.

Using the following​ formula:

​Y=1/(1-C1)(C0+I+G-C1T)

where c0 ​= autonomous consumption and c1​ = propensity to consume.

 

 

By how much does Y increase when G increases by​ one? ΔY​ = ?

 

.

By how much does Y decrease when T increases by​ one? ΔY​ = ?

 

The government spending multiplier and the tax multiplier are

A.different because taxes have to go through the propensity to consume impacts prior to affecting demand.

B.different because taxes affect demand indirectly through consumption.

C.different because government spending directly affects demand without an initial propensity to consume impact.

D.all of the above.

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Status NEW Posted 22 Jun 2017 05:06 AM My Price 8.00

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