What is the new equilibrium income

Assignment Help Business Economics

Reference no: EM13832910

Suppose the consumption behavior in problem 1 changes so that C=100+0.9Y, while I remains at 50.

A. Is the equilibrium level of income higher or lower than it was in problem 1(a)? Calculate the new equilibrium level, Y’, to verify this.

B. Now suppose Investment increases to I=100, just as in problem 1(d). What is the new equilibrium income?

C. Does the change in investment spending have more or less of an effect on Y than it did in problem 1? Why?

Reference no: EM13832910

Questions Cloud

Compute the equilibrium price and quantities : Compute the equilibrium price (P) and quantities (Q) in each country without trade. Now assume that free trade occurs. The free-trade price goes to 56.36 Baht. Who exports and imports cameras and in what quantities?

Supply of dollars and exchange rate for dollars : Suppose U.S. interest rates decline compared to the rest of the world. What would be the likely impact on the demand for dollars, supply of dollars, and exchange rate for dollars compared to, say, euros?

Earnings per share computations : Cabana Corporation has 400,000 shares of common stock outstanding throughout 2013. In addition, the corporation has 5,000, 20-year, 9% bonds issued at par in 2011. Each $1,000 bond is convertible into 20 shares of common stock after 9/23/14. During t..

Between unemployment rate and natural rate of unemployment : What is the difference(s), if any, between the unemployment rate and the natural rate of unemployment? Discuss.

What is the new equilibrium income : Suppose the consumption behavior in problem 1 changes so that C=100+0.9Y, while I remains at 50. Is the equilibrium level of income higher or lower than it was in problem 1(a)? Calculate the new equilibrium level, Y’, to verify this. Now suppose Inve..

Difference between stock exchange-over-the-counter market : What is the difference between a stock exchange and an over-the-counter market? What are the three most important stock market indexes? A company is expecting to pay a dividend per share of $20 per year forever. If investors require a 10% rate of ret..

Measuring the value of the nations output : The expenditure approach (the sum of all spendings) to measuring the value of the nation's output (GDP) is equivalent to the income approach (the sum of all payments to factors). Discuss and illustrate with examples(s) where necessary. Real GDP is th..

Discuss its relevance pros and cons : Do you think email marketing should integrated into a social media marketing plan? Why? Discuss its relevance, pros, and cons. This assignment only has to be a page long

What you have accomplished to your professional goal : Reflect on what you have accomplished relative to your professional goal during our course experience.

User Account

All Pages