User Account

All Pages

Calculate the equilibrium level of income

Assignment Help Business Economics
Reference no: EM132460892

In the aggregate expenditure model, assume that the consumption function is given by C = 800 + 0.8(Y - TP), that planned investment (I) equals 200, and that government purchases (G) and taxes (TP) each equal 200. Assume that there is no import or export spending.

a. Calculate the equilibrium level of income.

b. If government purchases (G) increase by 100 (all else held constant), calculate the new equilibrium level of income and the value of the multiplier.

c. Compared with the original equilibrium, if both government expenditure (G) and taxes (TP) increase by 100, so that the government budget remains balanced, does the equilibrium level of income remain unchanged? Explain your answer

Reference no: EM132460892

Questions Cloud

What way acculturation into american life change ashime : In what way(s) does the acculturation and/or enculturation into American life/lifestyles change Ashime and/or Ashoke?provide an example
Cigarette and alcohol advertisements : If this were the case, what would likely happen to the shapes of the total and marginal product for medical care (upward shift or downward shift)?
Discuss the prevalence of asymmetric information : Discuss the prevalence of asymmetric information in insurance contracts, in lending, in investment.
How did the growth of tobacco impact the land : How did the growth of tobacco impact the land, culture, economy, politics, and social relations both in North America and throughout the Atlantic?
Calculate the equilibrium level of income : If government purchases (G) increase by 100 (all else held constant), calculate the new equilibrium level of income and the value of the multiplier.
Consumer consumption of a good : How can the government reduce a consumer's consumption of a good (like schooling) by providing it at no cost? Please elaborate on what is expected (i.e., number
Kristine consumption pattern and welfare be affected : With the excise tax of $0.20 per six-pack, Kristine purchases three six-packs of Diet Coke per day. If the government eliminates the excises tax
What did it mean for the US and USSR during the Cold War : Is the space program still relevant? Is it worth the cost, considering the growing debt?What did it mean for the U.S. and USSR during the Cold War?
Tony budget line and his purchases of dental services : How does this affect Tony's budget line and his purchases of dental services?

Reviews

Write a Review

Business Economics Questions & Answers

  Average depth of the human vaginal cavity

What is the average depth of the human vaginal cavity?

  Describe how the us oil companies can remain competitive

describe how the US oil companies can remain competitive in the US market when over 35% of crude oil is currently sourced from domestic deep water drilling.

  Derive an expression for the marginal cost of production

A manufacturer estimates that its variable cost for manufacturing a given product is given by the following expression: C(q) = 25q2 + 2000q [$] where C is the total cost and q is the quantity produced. Derive an expression for the marginal cost of pr..

  When the fed uses expansionary monetary policy

When the Fed uses expansionary monetary policy, Consumer spending and autonomous government spending increase while investment spending decreases. Consumer spending, investment spending, and autonomous government spending decrease.

  Countries can expect to gain from international trade

Because their countries have similar institutions, the price paid for a computer in Germany and the United States are about the same when converted into the same currency.

  What is the market surplus-shortage at a price

Three individuals have $1000 and identical preferences for gum, g, and cigarettes, s, as measured by the utility function U(g,s) = 10g0.9a0.1. The price of gum is $9 and the price of cigarettes is $12. What is the market surplus/shortage at a price o..

  Assume the demand for good is log linear

Assume the demand for good X is log linear, with QX = c / (PX)^1/2. (a) If the quantity demanded is 120 when PX is $2.00, what is the quantity demanded when PX rises to $4.50? HINT: Begin by finding the value of the constant c. (b) Using your answer ..

  Hired through agencies are in indentured servitude

How might an employer seek to determine whether the individuals hired through agencies are in indentured servitude?

  Minimum acceptable price to the seller

Jennifer buys a piece of costume jewelry for $33 for which she was willing to pay $42. The minimum acceptable price to the seller, Nathan, was $30. Jennifer experiences:

  Calculate raising e to the power

1. Use excel function exp( ) to calculate raising e to the power of (-2.5 + 2*X1 + 3*X2), where X1=5.6 and X2=3.

  Discuss the relationship between budgeting and planning

Discuss the relationship between budgeting and planning. How are they related? What differences exist between the two?

  Illustrates what each nation can produce

Suppose the USA and Canada are considering to trade. Assume there are only two goods in the economy: wheat and corn. The table below illustrates what each nation can produce in a given year.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd