Calculate the equilibrium levels of national income, Macroeconomics

Assignment Help:

Let a macroeconomic model be of the following form:

C = a + bYD                            a = 10

T = T0                                   b = 4/5

G = G0                                  G0 = 10

 I = I0                                   I0 = 10

 YD = Y - T0                                     T0 = 10                                      

(a) Calculate the equilibrium levels of national income (Y), consumption (C) and Savings (S).

(b) Graph the above model representing both equilibrium conditions by separate graphs. That is,Y = C + I + G, and Total withdrawals = Total injections by graphing C and C + I functions separately as well as the aggregate expenditure function, C + I + G on the same graph paper.  Similarly, graph the S function by itself and S + T0 on a separate graph paper.  Label all the slopes and intercepts.  Make sure to present schedules.

(c)  If "a" in the consumption function were to increase by 5, G were to increase by 10 T0 were to increase by 10, calculate the separate as well as the total net effect of these changes on Y.


Related Discussions:- Calculate the equilibrium levels of national income

Find the nash equilibria, Two people are engaged in a joint project. If eac...

Two people are engaged in a joint project. If each person i puts in the effort x i , the outcome of the project is worth f ( x 1, x 2). Each person's effort level x i is a

Calculate profit-maximizing price and quantity, A monopolist faces the foll...

A monopolist faces the following demand function for its product: Q = 45 - 5P The fixed costs of the monopolist are $12 and the variable costs are $5 per unit. a) What are the pro

Estimate demand or supply-equilibrium price, Suppose that the demand curve ...

Suppose that the demand curve for apples is given by Qd = 140 -  5P, where Qd is the number of pounds demanded per year and p is the price per pound. The supply of apples can be de

Give brief explanation about the labour market, Introduction of labour mark...

Introduction of labour market A vital macroeconomic variable is the total amount of labor which is used in a certain time period. Amount of labor and amount of capital are sig

Demand for health care services, What is the relationship between quality, ...

What is the relationship between quality, consumption and demand for health care services?

How growth are improved living standards, How growth are improved living st...

How growth are improved living standards The two main benefits of growth are improved living standards and technological advancement. As an economy grows, the output of

Internal market forces, what are some internal market forces and how is the...

what are some internal market forces and how is the outcome of output, jobs, prices, growth, and international balance

what is gdp in this economy, I. Consider the following static optimization...

I. Consider the following static optimization problem. Suppose that a consumer has financial wealth W and owns the house H¯ . She has utility over housing H and nonhousing co

Annual fixed cost for a light fixture, The annual fixed cost for a light fi...

The annual fixed cost for a light fixture manufacturing company are $38,000, and the variable costs are $40 per unit. If the selling price per unit is p = 485 - 1.395X, what is the

Microsoft case study, 2.2 "Our business model works even if all internet so...

2.2 "Our business model works even if all internet software is free ....... We are still selling operating systems. What does Netscape''s business model look like? Not very good."

Write Your Message!

Captcha
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!

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