Compute the equilibrium values

Assignment Help Macroeconomics

Reference no: EM1373558

1. Assume that an earthquake destroys part of capital stock. Forecast what will happen to [a] total production, [b] the real return to capital, and [c] the real wage. For simplicity, assume that the size of the population is unaffected.

2. Assume that GDP is 5000. Consumption is Investment is where is the real interest rate. Taxes are 1000, and government expenditures are 1500.

[A] Compute the equilibrium values of and

[B] Compute the equilibrium values of private saving, government saving, and total saving.

[C] Now suppose that there is a technological innovation that makes businesses want to invest more, so that the new investment function is Calculate the new equilibrium values of and

[D] Compute the new equilibrium values of private saving, government saving, and total saving.

3. Assume that the government finances an increase in expenditures by raising taxes, so that the budget remains balanced (in other words). What happens to the interest rate and investment? For simplicity, assume that the MPC out of the tax cut is positive and less than one.

Reference no: EM1373558

Questions Cloud

Do you consider most people are poor listeners : Do you consider most people are poor listeners or good listeners? What is able to organizations do to improve listening skills of employees?

Economic threats or opportunities for the us : Determine the economic implications for the United States of the increase of China and India as significant economic powers.

Inside it may be necessary to communicate persuasively : Inside it may be necessary to communicate persuasively to a boss, peer, or subordinate. Assess how or if your communication would vary in each situation

Explain personal liability for business debts : Explain Personal Liability for Business Debts and Henry had loaned about $100,000 to a friend Mary to use in a business venture Mary was setting up with her associate Milly

Compute the equilibrium values : Assume that an earthquake destroys part of capital stock. Forecast what will happen to total production, the real return to capital, and real wage.

What actions would you propose the board of directors : What actions would you propose the board of directors take to avoid this double tax problem?

Analyzing the rights of parties to a ucc contract : Analyzing the Rights of Parties to a UCC Contract Jim's computer is giving him trouble therefore he brings it to the local computer repair shop

From the e-activity choice an athlete and study : From the e-Activity choice an athlete and study the performance trends of his or her career. Once you have reviewed his or her performance trends

What is the difference among these two concepts : A month later his eighteenth birthday corelli chooses that he would rather have $2,500 than the painting.

User Account

All Pages