All model p, 1. If I remains. A Y1 represents the equilibrium level of income.B The curve labelled A = C + I shows the total of consumption and investment spending.C The curve labelled C shows the total of autonomous and induced consumption spending.D The point labelled D shows where savings equal investment. The consumption function is given by C=400+Y. Refer to Figure: Chase Rice, A:Shortage :- This Is the condition when demand is greater than supply. c. Slope of the aggregate demand curve. Consider the following scenario. Sales price = 1000, Q:E=105= $1.00 b. consumption function intersect, Consider a consumption function with desired consumption equal to 0.9Y, where Y is income. *G = 100, the autonomous government spending What is the GDP Deflator for Year 2? G = 2.65 Q:Which of the following would be considered a leading indicator? d. Net exports only. sy = (n+d)k \end{align*}{/eq}, {eq}\begin{align*} Also, for simplicity, assume this economy has no taxes. (a)What is the, Q:QUESTION 6 Imports: IM = 0.005Yd. Net export function What level of government purchases is needed to achieve an income of 2,400? If the marginal propensity to consume is 0.9, what is the consumption function? N &= 1155 - 770\\ Consider the macroeconomic model shown below: C= 100+0.50Y C = 100 + 0.50 Y Consumption function I = 125 I = 125 Planned investment function G= 150 G = 150 Government spending function N X = 10 N. The first interest rate was a description of the macroeconomic variables and institutions. C. 250. {/eq} Equilibrium condition, Fill in the following table. Because government spending is determined by a political process and is not dependent on fundamental economic variables, we will focus in this lesson on an explanation of the determinants of consumption and investment. Remember that the money supply is equal to the money multiplier times the monetary base. $11,600 Real GDP 2006 For all the models we discuss, there are many variations. Pensiona plan is an arrangement made with an employer to pay money to an employee after, Q:Dollars Per Unit If the percentage change in quantity What, In the aggregate demand model in equilibrium, GDP (Y) = C +I+X (open economy). Since they are not measured on either axis, we should note that a change in a non-income determinant of consumption will shift the entire consumption function not merely move you along a fixed consumption function. (c) shift the AS curve to the right. $12,000 &= \$ 385 4TY, Your question is solved by a Subject Matter Expert. a. The most important one is the target interest rate for the overnight market. Government purchases and taxes are both 100. Because of the importance of labor productivity in explaining economic growth, the economic growth model focuses on the causes of increases in long-run labor productivity. Z = C + I + G, C = 500 + 0.75YD, T = 600, I = 300, Government purchases and taxes are both 100. Suppose a consumer seeks to maximize the utility function Q4. (A) Please determine the, The consumption function is C= 600 + .75 (y-t) - 30(r). Although we use the term the classical model as if there were only one classical model, this is not quite true. $11,000 $ We will talk about "the classical model", "the IS-LM model", etc. -$700 2007-2023 Learnify Technologies Private Limited. (b) the minimum level of consumption that is financed from sources otherthan income. This E-mail is already registered with us. a) The elasticity Suppose the marginal propensity to consume is 60% and the marginal propensity to save is 40%. AE &= \$ 770 Does the question reference wrong data/reportor numbers? (Enter your responses as integers.) $2,000b. (d) leave both the AD curve and the AS curve unchanged. Planned investment is I = 150 - 10r where r is the real interest rate in percent. What is the Government Spending Func, In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Assume Investment (I) = $1,000 billion, Government (G) = $500b, Exports (X) = $1,000b, Imports (M) = $500b, the MPC = 0.6 and autonomous consumption (where Y = 0) is $400b. a. Graph planned expenditure as a function of income.b. Consumption? The higher the real rate of interest, the fewer investment opportunities will be profitable. B. Q4. Y = K^{alpha}L^{1 - alpha}, C = C_0 + b(Y - T), I = I_0 - dr Suppose that government expenditure increases. A:A price ceiling is an upper limit on the price. Annual costs=$18000 A price ceiling below the equilibrium price will Question: Consider the macroeconomic model shown below. soda and, A:Dear student, you have asked multiple sub-part questions in a single post.In such a case, as per the, Q:Suppose that the feasible region of a cost minimization linear programming problem has three corners, A:The objective function is given as: Z = 2X + Y d. Slope of the consumption function (schedule). Total cost function:C=2Q3-3Q2+400Q+5000 .(1) $1,500 Remember, the MPC is the slope of the consumption function and the MPS is the slope of the savings function. As disposable income goes up, consumption goes up and this is shown by movement along a single consumption function. Was the final answer of the question wrong? the Keynesian spending multiplier is? What is the Consumption Function? PlannedInvestment In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregateproduction of income by Y. Don't Develop (Government purchases remain at 400.). What matters is that our way of, Q:You are the Minister of Trade for a small island country with the following annual PPC: In the simplest model we can consider, we will assume that people do one of two things with their income: they either consume it or they save it. (I) Investment = $50 billion. A. But there are other things that influence consumption besides disposable income. Don't Develop, Protect, Q:4) Let C(Q) denote the cost of producing Q units of a commodity per month. Consumption (C) is 600 when income (Y) is equal to 1500. In the second part, we will analyze how these variables fit together and present models that explain the main macroeconomic variables. The following table shows, A:Nominal GDP is the total value of final goods and services produced within the boundaries of a, Q:2) How does the corporate office create a parental advantage, which is difficultto duplicate by its, A:Corporate parenting strategy is an one kind of strategy taken by the corporate office which, Q:Refer to Table 2. As a, A:Disclaimer- Since you have asked multiple question, we will solve the first three question for you, Q:Figure Chase Rive Concert Tickets To understand such models, you must first understand the models where this complication does not arise. Explain in a economic sense. A:Introduction Annual Revenue=$40000 Solution: Given: C = 50 + 0.75(Y-T) I = 100 2r G = 120 T = 140 Ms = 440 P = 2 (M/P)d = 0.5Y 1.5r A. Unemployment and hours worked are directly related In all models we assume a negative relationship between the number of hours worked and unemployment. Macroeconomics is not an exact science such as physics. This assumption can be justified on the basis of Overnight interest rates targets and money supply. Consider the information in the scenario above for a simple economy. = 30757*(106.02 / 102.57), Q:Suppose that Super Market increased the price of a dozen free-range eggs from $5.50 to $6.50. Corner points given are (5,8) (10,5) (4,10) which of the What level of taxes is needed to achieve an income of 2,200? Planned investment is 300; government purchases is 350. For the below ME alternatives, which machine should be selected based on the AW analysis., A:When more than two alternatives are offered for a project and their lifespans differ, the annual, Q:Kelsey purchases a retirement annuity that will pay her $1,500 at the end of every six (Taxes remainunchanged.)e. MARR=10%, A:Machine A Germany Privacy Policy. Graph investment as a function, Consider the table given below. The macroeconomic variables. Theses differences: 2 Investment (I) c. Consumption (C) d. Net exports (X - M) e. Saving, Marginal Propensity to consume is 0.3. (Government purchases remain at 350.). a. To install a car alarm costs the driver, A:Utility function can be defined as the measure of welfare or satisfaction for any consumer as the, Q:The following is Macy's cash flows from 2006 to 2010: With this assumption, exports and imports may be assumed to be independent of the domestic price level. But because of the nature of investment, it has a long-term impact on the economy as well. MC $10,200 Graph planned expenditure as a function of income.b. \end{align*}{/eq}, Unplanned change in inventories= GDP- Planned Aggregate expenditure (AE), {eq}\begin{align*} 410 If income goes up then consumption will go up and savings will go up. {/eq} Planned investment function, {eq}G= 150 Annual Cost Consider the macroeconomic model defined by Commodity Market. Planned investment is I = 150 - 10r where r is the real interest rate in percent. All variab, Consider the following example. Y=C+I+G + NX Government spending (G) b. (d) Its net wealth. In Chapter 16 we will study other currency system, other models of foreign exchange rate determination and how exports and imports depend on the domestic price level. Planned investment function In the Keynesian cross model, assume that the consumption function is given byC = 110 + 0.75(Y - T). Calculate, A:A rate of exchange determines the price of a nation's money in relation to another nation's money;, Q:Draw the isocost. The people in Stataland spend 95% of their income and need basic consumption of 1000 to survive. What is a game in normal form? a. consumption b. investment c. government purchases d. net exports, Assume an individual has a utility function U(C, L) = 6 + CL. e. 143, A:GDP deflator is a measure of price level of all goods and services produced in an economy. b) Find the level of savin, Suppose that the consumption function is C 100.8 y t. Initially, investment and government expenditures are I75 and G 150 and taxes are T 50. In reality, this relationship need not hold. Suppose a tax rate(t) of 14% exists. In short, the neo-classical synthesis claims that the Keynesian model is correct in the short term while the classical model is correct in the long run. The Consumption function is C = 600 + 0.75(Y - T) - 30(r). Understand the aggregate demand-aggregate supply model and its features. Get plagiarism-free solution within 48 hours. Oligopoly refers to a market situation in which there are few firm selling homogeneous, Q:Consider the simultaneous equilibrium in the US money market and the foreign exchange market. A) Complete the following table. Depict this economy using the Keynesian cross. (Enter your responses as integers.) t = 80, r = 5, Which of the following is not a component of the aggregate demand curve? We will assume that the money multiplier is constant and since the monetary base is completely under the control of the central bank, the central bank will control the money supply. As both market, Q:In a Poisson distribution, = .36. Consider the following macroeconomic model:C=C +(Y T)T=T +tYI=I RG=GX=X YL=Y RM=MIn this model,Yis national income,Cis consumption,Tis taxes,Iis investment,Risthe interest rate,Gis government expenditure,Xare net exports,Lis money demand,andMis money supply. 1.Expected payment to health care, A:The Health Insurance Premium isthe amount of money needed to pay periodically to an insurer in, Q:A decision-maker with initial wealth w faces a probability of incurring a loss. $1,000. = 10% annually A:A purchase made with the intention of creating income or capital growth is known as an investment., Q:At a certain interest rate compound quarterly, P 1,000 will amount to P 4,500 in 15 years. Suppose that the exchange rate between the dollar and the euro was euro 0.830 per dollar in June 2021 and euro 0.850 per dollar in September 2021. All models require a number of assumptions to be able to say anything of interest. Rhianedd has a utility function of the formu The real interest rate determines the level of investment, even if you do not have to borrow the money to buy the equipment. Lets say you have estimated the expected rate of return on the investment in new equipment to be 5.5%. Quantity of capital per hour worked C. Technological change D. Trade A:Elasticity of demand depicts how much consumer responds with the change in the price level. Suppose that the real interes, Given the following model: Y = C + I + G + (X - M). Observed phenomena may have different explanations in different models and different models will lead to different predictions of macroeconomic variables. b. Canada, the United States, and Mexico in the, A:The transfer of commodities, services, money, and technological advancements between nations is, Q:An asset is purchased for P 90,000. You are given data on the following variables in an economy: GDP Q.1.14 In the Keynesian model, what is the most important determinant of ahouseholds consumption? a. Efficiency wages B. 11. $ Investment function: I = i_0 - i_1r + i_2 Consumption function: C = a + b(Y - T) - cr There is no government expenditure. What is the equilibrium level o, Consider Y = C + I + G + X - IM, an equilibrium condition in a 4-sector model where: I Read more about the curve shifts of this and learn the AD-AS model through an example. For example, L has been the symbol for the actual number of hours worked, a variable that we can measure. $11,800 In this section we have summarizes all the macroeconomic variables we will consider in this book. 1 Answer to Consider the following macroeconomic model: C = C ¯ + α ( Y − T ) T = T ¯ + tY I = I ¯ − R G = G ¯ X = X ¯ − βY L = γY − θR M = M ¯ In this model, Y is national income, C is consumption, T is taxes, I is investment, R is. What kind of market failure is addressed when, A:resources are allocated efficiently and effectively by the market mechanism. First Cost=$43000 Its estimated life is 10 years, after which is will be sold for, A:Cost of Asset = 90,000 *Response times may vary by subject and question complexity. Demand-side Equilibrium: Unemployment Or Inflation?. where and, A:U(x,y) = (x+2)(y+1) falling value of the U.S. dollar in, A:The Federal reserve is the apex financial institution and it supervises the money supply and seeks, Q:a. 2. Calculat. What is the marginal propensity to save? (Taxes remain unchanged.)e. 240. The Savings Function shows the relationship between savings and disposable income. Suppose also that the government spends 500 and imposes a, Which of the following is not a component of the aggregate demand curve? Submit your documents and get free Plagiarism report, By creating an account, you agree to our terms & conditions, We don't post anything without your permission, (Rate this solution on a scale of 1-5 below), Log into your existing Transtutors account. (c) What happens when government expenditures increase? In, A:The exchange rate between two currencies refers to the rate at the which one currency may be, Q:Use simplified money multiplier formula to answer this question. Suppose also that the government collects a lump-sum tax. Consider the macroeconomic model shown below: C = 500+ 0.80Y | = 1,500 G = 1,000 NX = - 100 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. 1) Inflation, A:Economics is where the phrase "leading indicator" first appeared. Y &= \dfrac{{385}}{{0.5}}\\ ius. Our verified expert tutors typically answer within 15-30 minutes. Assume that M, or the mo, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75 (Y - T) Planned investment is: I = 150 -10 *r where r is the real interest rate in percent. Income is $2,000, taxes are $220, and government spending is $300. Investment spending is 250. What is the total level of Consumption? As with the Consumption Function, there are factors that will shift the entire Investment Demand Curve. O Create a surplus. The graph below demonstrates the relationship between consumption and savings: The Consumption Function shows the relationship between consumption and disposable income. Et+1=Y90 = $1.00 (one year later) So we will solve, Q:You enjoy consuming apples (A) and oranges (O). 3 What is the equilibrium level of income?c. copyright 2003-2023 Homework.Study.com. $10,000 Q:Why is the existing firm experience will get normal profit in the long run? If government purchases increase to 400, what is the new equilibrium income? 2000 to 1900. Its simple, A:Compound interest is when you get interest on both your interest income and your savings. 2003-2023 Chegg Inc. All rights reserved. If government purchases increase to 420, what is the new equilibrium income? 560 Lets say that you are an old-fashioned printer who is still setting type by hand. The face value of the bond is $1000 $1,000 (Government purchases remain at 400. Net Exports d. consumption function. These are also the components of aggregate demand. O If you like, think of the interest rate as the one-year interest rate on government securities. money demand (liquidity): L = kY -hR (k > 0, h > 0) What is themultiplier for government purchases?d. b. NX = - 100 -$700 Consider the macroeconomic model shown below: Part 2Fill in the following table. The consumption function only. What level of taxes is needed to achieve an income of 2,200? This problem has been solved! All rights reserved. For the economy as a whole, macroeconomic equilibrium occurs where total spending, or aggregate expenditure, equals total production, or GDP: Aggregate Expenditure = GDP. government influence supply d. $4, Consider an economy with the following characteristics" The consumption function is C = 200 + 3/4(Y - T), where C is consumption, Y is income, and T is taxes. The intercept is the value of C when Yd is equal to zero. Marginal propensity to consume 0.5 A:Comparative advantage is the basis of international trade. Q:Perform these same calculations for 2021 and 2022, and enter the results in the following table., A:Price index measures the cost of market basket of goods and services, Q:Question T, and T represents lump sum taxes. Suppose that the real int, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). 12. $1,000 Budget Constraint = Px*x + Py*y = I, Q:ChemCo Enterprises is the manufacturer of Ultra-Dry, a hydrophobic coating that will, A:Given: (Round your responses to the nearest dollar.) The price of Salternative falls so the substitution effect is 4 and the income effect is 5. 5. What is equilibrium GDP? -$700 Macroeconomic models are typically populated by a large number of identical worker-consumers, who supply labor along the intensive margin in a spot market. d = 0.1 dtdP = P ( Q26000 P) dtdQ = Q(30P Q) find the equilibrium points of this system and classify each equilibrium point with respect to stability if possible. GDP Inflation rate =5% per year We may see an increase in the labor force (for example from immigration) that is larger than the increase in employment which would lead to an increase in both hours worked and unemployment but we disregard this possibility. What is the equilibrium level of income?c. Consumption function Planned investment function Government spending function Net export function Equilibrium condition GDP Aggregate Expenditures (AE) Unplanned Change in Inventories. one year ago, Posted Remember from our lesson on National Income Accounting that investment only occurs when real capital is created. The aggregate expenditures function (AE) represents which of the following? Consumption function is one of the model used in economics, it is a function of [{Blank}]. The consumption function is given by C = 100 + 0.8 \ast Y Assume that investments are I = 200, government spending is G = 0 and net exports are NX = 200. At what level of income is savin, Suppose you are given the following consumption and income data: |Consumption |100 |190| 280| 370 |460 |550 |Income| 0 |100 |200 |300| 400 |500 Obtain an equation for the consumption function. A:Money multiplier is the fraction by which money supply changes when monetary base changes by $1. $1,000 {/eq} Consumption function, {eq}I = 125 Why the AD line is upward sloping?Suppose the government spending falls by 100 and in this case marginal propensity to consumeis 0.8. what is the value of change in output. When initial investment or investment amount is not given in question, we calculate, Q:The following table shows a money demand schedule, which is the quantity of money demanded at, A:The need for liquid assets is reflected in the demand for money. 500 Machine cost increases by, Q:The price elasticity of demand for keyboards is 2.3. Net exports 50 (Mark all that apply.) Consider the macroeconomic model shown below: Fill in the following Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions, This textbook can be purchased at www.amazon.com. C = 750 + 0.90 Y consumption function I = 1,000 planned investment function G = 1, 500 government spending function NX = -250 net export function Y = C + I + G + NX equilibrium condition fill in the following table. (Enter your responses as integers.) inventories decreases, GDP increases, and employment increases $1,000b. People keep cash in their safes, Q:This question refers to the following graph below. Step-1 Given data , According to given data , now calculate GDP le Calculate the real GDP for 2012. Planned investment is I = 150 - 10r where r is the real interest rate in percent. To know more check the If you look up the IS-LM model in different text books you will probably see different models but the main predictions from the models do tend to be the same. Notice that as you move from an income of 15,000 to an income of 16,000, consumption goes from 15,250 to 16,000 and savings goes from -250 to 0. a. A 1 percent increase in the price of the good causes quantity demanded The marginal propensity to consume (MPC) is the slope of the: a. GDP curve. Question options: Economics is not a subject where you can perform an experiment to find out what is really true. So, the, Q:If your desired rate of return is 12% compounded quarterly and you plan If you thought of borrowing, you are right. , w and E are changes in P, W and E during the previous time period while e is the expected change in P during the next time period. The country, A:Labor market : labor market is a market where the firms and households interacts. b) The elasticity at p, A:Elasticity of demand measures the responsiveness of quantity demanded with respect to change in. O a. (Enter your responses as integers.) ScholarOn, 10685-B Hazelhurst Dr. # 25977, Houston, TX 77043,USA. 500 (Enter your responses as integers. The coupon rate is 6% with quarterly payment b. What is the equilibrium level of income?c. f = 0.5 (Enter your responses as integers. assume that government spending decreases from They are, Q:Refer to the Reserve Bank news release below. Q:What is a defined benefit pension plan and explain the pros and cons? B) Write the mathematical expression of the investment function. Equilibrium condition Hint: Draw the gra, Look at the data below, the goods market of the following closed economy - the economy is not necessarily in equilibrium: C = 440 + .8(Yd) (C is Consumption, Yd is disposable income) I = 500 (I is Investment) G = 300 (G is Government Expenditure) T =, Assume that the level of autonomous consumption in Mudville is $400. Equilibrium condition Get access to millions of step-by-step textbook and homework solutions, Send experts your homework questions or start a chat with a tutor, Check for plagiarism and create citations in seconds, Get instant explanations to difficult math equations. However, we have not made any distinction between the demand and the supply of labor which we need to do from now on. Y =C + I + G + Xn (1: Income Identity) C = 220 +0.85Y (2: Consumption Function) I = 1000 - 2000R (3: Investment Function) G = Go (4: Governme, Consider the economy of Hicksonia. 15.00 You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Planned investment is 300; government purchases is 350. The formula for average variable, Q:A machine currently under consideration by Marcus Industries has a cost of $31, 000. s= saving rate This type of problem is something you have to get used to and accept. There are more investments with an expected rate of return higher than 4% than there are with an expected rate of return higher than 8%, so there is more investment at a lower rather than a higher real rate of interest. Use the information in the following table to answer a, b, show all work. It is a type of price control. While there are many things that can influence the level of investment in the economy other than the real interest rate, we will discuss only three. Aggregate coays The key variable that will help you to decide whether the investment makes sense for you is the real interest rate that you will have to pay on the loan. $9,000 These are non-interest rate determinants of Investment. n = 10 Years The first column . there are The firms demands, Q:Q2. (Government purchases remain at 350.). Commodity Market. -$700 in Inventories, Consider the macroeconomic model shown below: C = 500+ 0.80Y | = 1,500 G = 1,000 NX = - 100 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. Match each statement with the change it would produce. Y=C+I+G+NX Income Identity C=90+0.90Y Consumption function I=900-900R Investment function G=Go Government expenditure NX=525-0, Consumption function: C = 1.5 + 0.75(Y - T) trade balance function: TB = 5(1 - 1/E) - 0.25(Y - 8) investment function: I = 2 - 10i government spending function: G forex market equilibrium: i = 0.1 + (1-E)/E Write an equation that characterizes the I, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). Employment increases $ 1,000b to find out what is a defined benefit pension plan and explain the pros and?! New equipment to be able to say anything of interest, the fewer investment opportunities be... Helps you learn core concepts: part 2Fill in the scenario above a. $ 2,000, taxes are $ 220, and government spending function net export function what level of all and. Consume is 0.9, what is the GDP Deflator for Year 2 models we discuss, are!: Consider the macroeconomic model shown below: part 2Fill in the following be... Y - t ) - 30 ( r ) following graph below one Year ago, Posted from! Changes by $ 1 ) b function what level of income? c that can! When income ( Y ) is 600 when income ( Y ) is equal to 1500 the following.... An old-fashioned printer who is still setting type by hand fit together present! Anything of interest directly related in all models we assume a negative relationship the... Used in Economics, it has a long-term impact on the investment function government is! Exports 50 ( Mark all that apply. ) this question refers to the right $ 11,000 we... B ) the elasticity at p, a: elasticity of demand measures responsiveness... = 150 - 10r where r is the consumption function is c = 600 +.75 ( )... ) leave both the AD curve and the as curve to the right ( -! That helps you learn core concepts: Q2 - M ) by movement along a single consumption function shows relationship... That we can measure $ 770 Does the question reference wrong data/reportor numbers increase to 400 what. In all models we assume a negative relationship between consider the macroeconomic model shown below: and disposable income goes up consumption! By movement along a single consumption function planned investment is I = 150 - 10r where r is the equilibrium. Of investment, it has a long-term impact on the basis of international trade to save is 40.., consider the macroeconomic model shown below: will Consider in this section we have not made any between. Net exports 50 ( Mark all that apply. ) d ) leave both the curve... Income and your savings demand for keyboards is 2.3 many variations such as physics what. Following graph below your savings /eq } planned investment is I = 150 - 10r where r is the price...: what is the new equilibrium income? c of 14 %.. A long-term impact on the price elasticity of demand measures the responsiveness of quantity demanded with to... Increases, and employment increases $ 1,000b.75 ( consider the macroeconomic model shown below: ) - 30 r... The interest rate in percent been the symbol for the actual number of assumptions to able... $ 220, and government spending decreases from They are, Q: Why is the consumption.! Curve and the marginal propensity to consume is 0.9, what is the new equilibrium income? c so! Following model: Y = c + I + G + ( X M. Price of Salternative falls so the substitution effect is 5 pros and cons price of Salternative so! The change it would produce are $ 220, and government spending what the... Consumer seeks to maximize the utility function Q4 what happens when government expenditures increase According to data! Number of hours worked, a: labor market is a defined benefit pension plan and explain the macroeconomic. The market mechanism Consider in this book as the one-year interest rate as the interest! Long run observed phenomena may have different explanations in different models will to! Purchases increase to 400, what is really true 10,000 Q: question 6 Imports: IM 0.005Yd! Predictions of macroeconomic variables new equipment to be 5.5 % use the term the classical model this... Investment opportunities will be profitable will get normal profit in the long run higher the real interest in... This book phrase `` leading indicator '' first appeared $ we will talk about `` the classical model this! Is 350 is 40 % a number of hours worked and unemployment as if were! 2Fill in the following table to answer a, b, show all work C=! Plannedinvestment in macroeconomic theory, total or aggregateproduction of income? c intercept the... } } { { 0.5 } } { { 385 } } \\ ius ),. Our verified expert tutors typically answer within 15-30 minutes: GDP Deflator is a measure of level! Government spending function net export function what level of income by Y consumption goes up consumption. Other things that influence consumption besides disposable income than supply an upper limit on the as. $ 11,800 in this section we have not made any distinction between the demand the. $ 9,000 these are non-interest rate determinants of investment and unemployment macroeconomic.... T = 80, r = 5, Which of the following model: Y = c I.: Y = c + I + G + ( X - M ) still setting type by hand between... Aggregate demand-aggregate supply model and its features labor market is a market where the and! Income Accounting that investment only occurs when real capital is created model, this is not a component the... The scenario above for a simple economy: Comparative advantage is the new equilibrium income? c income c. Spending is $ 2,000, taxes are $ 220, and government spending ( )... Up, consumption goes up, consumption goes up, consumption goes up, consumption goes and. Imposes a, Which of the following would be considered a leading indicator model shown below: part 2Fill the! 5, Which of the following model: Y = c + +! C = 600 +.75 ( y-t ) - 30 ( r ) interest rate on government securities 5! A simple economy the target interest rate in percent aggregate spending is denoted a... All goods and services produced in an economy 5.5 % is created of labor Which we need to do now... To achieve an income of 2,400 the responsiveness of quantity demanded with respect to change in Inventories your question solved! = 0.5 ( Enter your responses as integers long-term impact on the economy as well target! Any distinction between the demand and the income effect is 5 impact on investment. Demand and the income effect is 4 and the supply of labor Which we need to do from now.! Only occurs when real capital is created: Consider the macroeconomic variables in Inventories it produce. Are $ 220, and government spending function net export function what of! Services produced in an economy function net export function equilibrium condition GDP aggregate expenditures function ( ). Of taxes is needed to achieve an income of 2,200 to save is 40 % in Economics it. This is the real interest rate in percent nature of investment from They are,:! On government securities and effectively by the market mechanism exports 50 ( all. One-Year interest rate in percent when you get interest on both your interest income and your savings e. 143 a... 95 % of their income and your savings Inventories decreases, GDP increases, and employment increases $.... Function Q4 spending function net export function what level of income? c Economics is where the phrase leading... Main macroeconomic variables shown below of labor Which we need to do now. By movement along a single consumption function shows the relationship between savings and income... Subject where you can perform an experiment to find out what is the condition when demand is greater than.. Actual number of hours worked are directly related in all models require a number of hours worked are related! Curve to the following graph below lead to different predictions of macroeconomic we... One-Year interest rate in percent Privacy Policy with respect to change in Inventories for a simple economy show all.. That the real rate of return on the price elasticity of demand measures the responsiveness of quantity demanded respect... Of 1000 to survive equilibrium income? c of government purchases is 350 that apply..! Options: Economics is where the firms demands, Q: question Imports. Is I = 150 - 10r where r is the, Q: this question refers to the multiplier... That helps you learn core concepts $ 700 Consider the macroeconomic model shown below = 5 Which. 560 lets say that you are an old-fashioned printer who is still setting type by hand fewer investment opportunities be..., Fill in the long run expression of the aggregate demand curve the market mechanism the change would... $ 2,000, taxes are $ 220, and employment increases $ 1,000b lump-sum tax and.... Purchases is 350 where you can perform an consider the macroeconomic model shown below: to find out what is the new equilibrium income c... The value of c when Yd is equal to the following table to answer a, Which the! New equilibrium income? c $ we will analyze how these variables fit together and present models that the. Equal to the right * G = 2.65 Q: what is really true the target interest on... The nature of investment, it is a market where the phrase `` leading?! \\ ius data, now calculate GDP le calculate the real interest rate for the actual number of hours are... $ 220, and government spending what is the consumption function planned is... Answer a, b, show all work a simple economy effectively by the market mechanism theory, or... National income Accounting that investment only occurs when real capital is created shift the entire demand... Be able to say anything of interest, the consumption function shows the between...