How the aggregate demand at current prices will shift

Reference no: EM13213233

Suppose the consumption function is C = $400 billion + 0.8Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with: ( a ) A $50 billion increase in government purchases? ( b ) A $50 billion tax cut? ( c ) A $50 billion increase in income transfers?

Reference no: EM13213233

Questions Cloud

Explain copper sulphate solution using a current : What mass of copper would you expect to be deposited from a copper (II) sulphate solution using a current

Explain delta-e for the system : Place a coffee cup that holds hot coffee in a cold room and let it sit there for 4 hours. Consider the coffee inside the coffee cup as your system

Compute the natural rate of unemployment : Suppose that the Phillips curve is given by ?t-?t^e= 0.1-2?t where ?t^e=?t-1 Suppose that inflation in year t-1 is zero. In year t, the authorities decide to keep the unemployment rate at 4% forever. 1. Compute the natural rate of unemployment.

Benchmark in terms of portfolio returns : Compare Joe's and Kim's performance relative to the benchmark in terms of portfolio returns and determine which manager is performing better than the market in a risk adjusted basis.

How the aggregate demand at current prices will shift : Suppose the consumption function is C = $400 billion + 0.8Y and the government wants to stimulate the economy. By how much will aggregate demand at current prices shift initially (before multiplier effects) with: ( a ) A $50 billion increase in go..

By how much does consumer saving increase initially : If taxes were cut by $200 billion, the resulting spree would amount to Initial increase in consumption = 0.75 3 $200 billion = $150 billion ( a ) By how much does consumer saving increase initially ( b ) How large is the initial spending injection

Calculate the performance measures of each of funds : Calculate the performance measures of each of the funds (A, B, and C) using Sharpe's, Treynor's, and Jensen's measures. Rank the results for each of the funds and identify the funds that outperformed the market using the Sharpe's ratio and Treynor'..

How to innovate and possibly earn a normal profit : The basic model of pure competition reviewed in this chapter finds that in the long run all firms in a purely competitive industry will earn normal profits. If all firms only earn a normal profit in the long run, firms will develop new products or..

What role does each type of pay play in motivating managers : explain several dimensions of the shareholder-principal conflict with manager-agents known as the principal-agent problem. to mitigate agency problems between senior and executives and shareholders, should the compensation committee of the board.

User Account

All Pages