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Consider the following aggregate expenditure model of the Canadian economy operating with givenwages and other factor prices, price level, interest rates, exchange rates, and expectations: C = 50 + 0.8YD I = 400 G = 500 T = 0.3Y X = 650 IM = 0.36Y where C is consumption (the 0.8 term represents the marginal propensity to consume) YD is disposable income, I is investment, G is government spending on goods and services, T is the total value of taxes net of transfers (the 0.3 term represents the net tax rate on national income), X is exports, and IM is imports (the 0.36 term represents the marginal propensity to import). (a) Solve for aggregate expenditures (AE) as a function of Y, and calculate the equilibrium level of national income. Illustrate your equilibrium in a diagram with AE on the vertical and Y on the horizontal axis. What is the value of the multiplier? (b) Calculate the level of disposable income, consumption, private saving, government budget balance, and net exports at the equilibrium. Express the components of aggregate expenditure (C, I, G, and NX) as percentages of GDP (to one decimal place). (c) Suppose that (due to the decrease in world oil prices) Canadian exports decrease by 100 from 650 to 550. What is the new level of GDP? Illustrate in your diagram. What is the effect on the government's budget balance? What happens to net exports? Can you explain why the change in net exports less than the decrease in exports? (d) Now suppose that the government decides to use its spending power to restore national income to its original level. By how much must the government increase G to restore the original level of national income? What will happen to the government's budget balance? How do you explain the new level of the budget balance compared to that in part (c) and in part (b)?
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ach sales manager then decides how to divide the cars among the independently owned dealerships in the region. Because of high demand for these cars, dealerships all want to receive as many cars as they can from the regional manager.
choose two real-world companies in different industries one that you feel faces elastic demand and one that you feel
Determine the marginal cost for bottle of wine and what will be the reduction in number of crashes at that intersection achieved by the mayor?
You are told that 75 cents out of every extra dollar pumped into the economy goes toward consumption (as opposed to saving). Estimate the GDP impact of a positive change in government spending that equals $25 billion.
A "run on gasoline" occurs when consumers' fears of gas shortages in the future lead them to demand more gasoline now. Using supply and demand analysis, which of the following is consistent with this situation
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One advantage of forming a business as a corporation is: the business is subject to less taxes and fewer government regulations limited liability management can make quick decisions individual stockholders can influence daily business
In the standard Hotelling model of exhaustible resource pricing
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consider a landscaping service market. here landscaping means mowing weeding and trimming etc i.e. a regular
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