Marginal propensity to consume economy, Macroeconomics

Assignment Help:

Consider the following:

An economy is found to have output, y = 20000 Also assume that the government runs a deficit where tax revenue T= 4000 and government expenditures G=5000. The consumption function is represented by the following equation:

C=2000+0.5(Y-T) 

Investment depends on the interest rate and is represented by the following equation:

Ir = 5300-50r

Answer the following questions:

a)  What is the marginal propensity to consume in this economy?

b)  What is private saving in this economy?

c)  What is public saving in this economy?

d)  What is national saving in this economy?

e)  What is the equilibrium interest rate in this economy?

If the government decides to balance the budget by lowering spending

f)   What will the new real interest rate be?

g)  If the nominal interest rate is 1%, what would the inflation rate be in this economy?


Related Discussions:- Marginal propensity to consume economy

Expenditures and the effects of fiscal policy, Expenditures and the Effects...

Expenditures and the Effects of Fiscal Policy are stated as follows: Having finished the discussion on the tax policy and taxation, now let’s us focus on expenditures and the e

Trade, short notes on absolute advantage

short notes on absolute advantage

Equilibrium in both the goods and in the money market, Equilibrium in both ...

Equilibrium in both the goods and in the money market  If both the goods- and the money markets are to be in equilibrium... ...if P increases, Y must fal

International trade and Economic growth, If real GDP was $13.1 trillion in ...

If real GDP was $13.1 trillion in 2013 and $13.3 in 2014, what is the growth rate? (b) How many years would it take for GDP (gross domestic product) to double (using your answer fr

Calculate the numbers, Use the information below to calculate the numbers i...

Use the information below to calculate the numbers instead of "?" marks in the Table. Show and explain all your calculations?

5 key pieces of data, Review the Federal Reserve Board website. Identify at...

Review the Federal Reserve Board website. Identify at least five key pieces of data (links) you would use in microeconomic decision making on the Web site, and tell what data that

Two evils of monopoly, A government purchase real GDP. Are increases in gov...

A government purchase real GDP. Are increases in government purchases associated with increases in real GDP?Describe the important characteristics of perfect competition and monopo

Grocery store manager, A grocery store manager would like to have an idea c...

A grocery store manager would like to have an idea concerning the average amount milk the store sells per day. In a sample of 70 days, the average amount number of gallons sold was

National income, There are many ways to measure the national income. a) Lis...

There are many ways to measure the national income. a) List at least 5 of themk question #Minimum 100 words accepted#

Write the mass balance equation, Environmental engineers and scientists are...

Environmental engineers and scientists are becoming concerned about pharmaceuticals in the environment. An antibiotic is discharged into a small lake at an influent concentration o

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