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

The income tax rate is reduced, If income falls below its potential and the...

If income falls below its potential and the income tax rate is reduced, this will: A. raise the passive deficit but reduce the structural deficit. B. raise both the passive and str

determine the total far-field, Four Hertzian dipoles (oriented in the z-di...

Four Hertzian dipoles (oriented in the z-dir.) are placed on an x-y plane with spacing (d=λ o /2) between them as shown in figure. a) Derive the array factor for this setup b

Why gdp is determined only by aggregate demand, Q. Why GDP is determined on...

Q. Why GDP is determined only by aggregate demand? Note that we haven't said anything about the aggregate supply so far. In order to justify why GDP is determined only by aggre

Monetary policy , Under what conditions does the text explain that monetary...

Under what conditions does the text explain that monetary policy is neutral? If it is neutral under these conditions, why is it still an important economic policy tool? Your answer

State the term- - gdp is a flow, State the term- - GDP is a flow Lastl...

State the term- - GDP is a flow Lastly, note that GDP is a flow variable and not a stock variable. By a flow variable we mean a variable which is measured in something per uni

Stan garner resides in illinois, Stan Garner resides in Illinois and promot...

Stan Garner resides in Illinois and promotes boxing matches for Super sports, INC. an Illinois corporation. Garner created the connect of "ages" promotion- a three fight series of

Changes in price promotion, An end-of-aisle price promotion changes the pri...

An end-of-aisle price promotion changes the price elasticity of a good from -2 to -3. If the normal price is $10, what should the promotional price be?

What are the contents in the market strikes back, What are the contents in ...

What are the contents in the market strikes back? a. Price controls • Price ceiling • Price floor b. Quantity controls quota c. Excise tax d. Inefficiency

World leaders to be part of a team, You have been invited by world leaders ...

You have been invited by world leaders to be part of a team of international economists selected to make recommendations on how the international community might work together more

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