C. 250. C stands for total consumption by all agents in the economy and, as. Consumption function and the exp, From the following information about the structural equations of a closed economy, derive the IS and LM curves, and solve for equilibrium income and the interest rate: C=50+0.8Y (consumption function), I=20-5R (investment function), L=100-R+0.5Y (money de, Consider the following model: Y=C+I_0+G_0; C=a+bY(1-t_0),(a0;0b1) Y stands for Income, C for Consumption, I for Investment and G for Government Expenditure, t_0 for tax rate. Understand the aggregate demand-aggregate supply model and its features. The function displays diminishing marginal utility with respect to both Y and X II. $ Write down the expression for the average cost function. Consider the macroeconomic model shown below: C = 100+ 0.90Y 1 = 100 G= 150 NX = -50 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. They are not difficult, but it is easy to make careless mistakes that produce dramatically wrong results.) (Hint: Be very careful in your calculations. -$700 b.Calculate private investment spending. *C = 150 + 0.9DI, the consumption function Consider the utility function, U=xy+x+y and suppose the consumer has budget constraint of pxx+pyy=m. Derive t, Consider the table given below. U= alnx +blny Solve for the indirect utility function and expenditure function (either by inverting the indirect utility function or minimizing expenditure using the Lagrangian method). Economics Economics questions and answers Consider the macroeconomic model shown below: C = 1,000+ 0.75Y Consumption function 1 = 1,500 Planned investment function G = 1,250 Government spending function NX = - 100 Net export function Equilibrium condition YC+I+G + NX Fill in the following table. a. What is the equilibrium real GDP for this economy? D. All of the above. The following equations describe consumption, investment, government spending, taxes, and net exports in the country of Economika. Corner points given are (5,8) (10,5) (4,10) Definition 1 / 551 depreciated against the dollar because more euros are needed to purchase one dollar. $10,000 Suppose that autonomous consumption is 1,200, government purchases are 2,000, planned investment spending is 500, net exports are 500, and the MPC is 0.75. Assume an individual has a utility function U(C, L) = 6 + CL. In the circular flow model, investment, government spending, and exports are classified as: A) injections. Is the assumption that more is better satisfied for both goods? Y &= Our experts can answer your tough homework and study questions. Understand what the expenditure approach is. Total cost function:C=2Q3-3Q2+400Q+5000 .(1) G = 1,000 Consider the utility function \upsilon (x_1, x_2) = x_1 + x_2. *X = 200, the autonomous exports, Section A (1) Consider the following macroeconomic model of an economy. In the Solow model: a) How is the investment function related to the production function? D. consumpti, In the aggregate demand model in equilibrium, GDP (Y) = C +I+X (open economy). (b) Find the cost function and draw it (with respect to q). Fill in the following table. This utility function implies that the individual's marginal utility of leisure is C and her marginal utility of consumption is L. The individual has an endowment of V in non-labor income and T, Consider the table given below. copyright 2003-2023 Homework.Study.com. What is the indirect utility function and expenditure function? -$700 a. Use comparative static analysis to find the expressions and the signs, Suppose that the following IS-LM model represents the Econ2020 economy. Let's, A: resources are allocated efficiently and effectively by the market mechanism. B) leakages. Aggregate a. The consumer has an income of $18. Government purchases are 1000, net exports are zero, and desired investment varies with real interest rate ac, In the Keynesian model, the consumption function is C = 0.8(Y - T), planned investment I is equal to $400, taxes T are $100, and the government spending G is $60. Illustrate answers with graphs. The saving function? a. $9,000 $1,500 1. Assume further that planned investment Ig and net exports X_n are independent of the level of real GDP and constant at I_g = 40, G =20 and X_n = 10. $1,500 Why, 1. A) What is the amount of autonomous consumption? Consider the macroeconomic model shown below: C = 100+ 0.50Y Consumption function I = 125 Planned investment function G= 150 Government spending function NX = 10 Net export function Y=C+I+G+NX. 1. C = 85 + 0,5Yd a. First week only $4.99! Assume that the price level remains unchanged at all levels of real GDP. Investment C. Net capital outflow D. Is this coun, The macro stability condition requires leakages to be equal to injections. What level of government purchases is needed to achieve an income of 2,200? Considern the following statements regarding the properties of this utility function. Flashcards Learn Test Match Created by tobisways Terms in this set (22) The aggregate expenditure model can be written in terms of four spending categories. $ Leftward shift in demand=, A: The term "government spending" describes the cash that the government spends on various goods and, A: GDP deflator is a measure of price level of all goods and services produced in an economy. Consumption function: What is the nu, Consider the combined Solow-Romer model: Y_t = A_t K_t^{\bar a} L_{Yt}^{1-\bar a} (1. The aggregate expenditures function (AE) represents which of the following? NX = - 100 (A) Obtain the savings function equation S and find th. e. All of the answers above combined. (Enter your responses as integers.). The consumption function is given by C=400+Y. Consider the simplest macro model with demand-determined output. The price of Salternative falls so the substitution effect is 4 and the income effect is 5, A: Only in competitive market frameworks do freedom of entry and exit exist. C. consumption + investment + government purchases + net imports. b. 45-degree line. Which of the following is the equation for the consumption function? Consider the following utility function (referred as a quasi-linear utility function as it is linear in the second element): u(x, y) = \ln(x) + y, with prices and income given by: px = 1, p_y \in R_, Consider the following utility function (referred as a quasi-linear utility function as it is linear in the second element): u(x,y)=ln(x)+y. $1,000 The aggregate expenditures function (AE) represents which of the following? Total gross domestic product = $ _, GDP per person is $ _. b. Disposable income: Yd =, Assume that the marginal propensity to consume in an economy is 0.8. (f) What is the governments budget deficit or surplus? Equilibrium condition What will be the new equilibrium level of GDP? T = 0,25Y What is the value of the equilibrium level of real GDP (denoted Y*)? Assume a simple model without any government or net exports. Suppose you are given the following consumption and income data: |Consumption |100 |190| 280| 370 |460 |550 |Income| 0 |100 |200 |300| 400 |500 Obtain an equation for the consumption function. If they are more than real national income, there is surplus stock in the country. (b) the minimum level of consumption that is financed from sources otherthan income. (b) What is the slope of the AE function? If government purchases increase to 400, what is the new equilibrium income? B) Write the mathematical expression of the investment function. C is 1.6. $14,000 b. Derive the Marshallian demand functions. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is inv, Suppose the following table shows consumption (C), planned investment (Ip), government purchases (G), and net exports (NX) in a hypothetical economy for various levels of real GDP. The consumption function is given by C = 100 + 0.8 \ast Y Assume that investments are I = 200, government spending is G = 0 and net exports are NX = 200. $1,500 0.4 c. 0.6 d. 0.8 | National Income (GDP) | Consumption | Investment | Government Expenditure | 0 | 400 | 50 | 50 | 500 | 800 | 50 | 50 | 1,000 | 1,200 | 50 | 50 | 1,5, You are given the following model that describes the economy of Hypothetica. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Consider a small economy that is closed to trade, so it's not exports are equal to zero. Machine cost increases by, A: Resource scarcity occurs when demand for a resource exceeds supply. What is the total level of Consumption? Consider an economy in which the consumption function takes the following algebraic form, C = 300 + 0.75DI, and in which investment (I) is always 900 and net exports are always 100. So, the, A: Given c. $3,000b. Assume further that planned investment (Ig) and net exports (Xn) are independent of the level o, Assume that the consumption schedule for a private open economy is such that consumption C = 20 + 0.75Y. Consider the utility function u(x_1,x_2) = max(x_1,x_2). Suppose the consumption function is C = \bar{C} + c(Y -T), where C is a parameter called autonomous consumption that r. How do we find the expenditure function, when we get a certain utility function? f = 0.5 Assume that the consumption schedule for a private open economy is such that consumption C = 20 + 0.80 Y. What level of taxes is needed to achieve an income of 2,200? (Round your responses to the nearest dollar.) (c) What is the slope of the AE function? Consider again the Classical model given in question 2, where. Consider the macroeconomic model shown below: C = 250 + 0.80Y Consumption function I = 2,000 Planned investment function G = 1,250 Government spending function NX = 100 Net export function Y = C + I + G + NX Equilibrium condition Fill in the following table. The investment demand curve only. What is equilibrium GDP? Why the AD line is upward sloping?Suppose the government spending falls by 100 and in this case marginal propensity to consumeis 0.8. what is the value of change in output. 2000 to 1900. What is the total amount of GDP? When a country sustains high growth rates, life expectancy at birth increases. In your answers, expain brifly how did you get the numerical result. B. b. Find the equilibrium level of GDP. B. consumption + investment + government purchases + net exports. You'll get a detailed solution from a subject matter expert that helps you learn core concepts. Are firms in this economy experiencing a, Consider the following macroeconomic model of an economy. (Taxes remain unchanged.)e. Using a "Keynesian cross" (or 45-, Assume that the consumption schedule for a private open economy is such that consumption C = 40 + 0.75Y. What is the multiplier in this model? A Y1 represents the equilibrium level of income.B The curve labelled A = C + I shows the total of consumption and investment spending.C The curve labelled C shows the total of autonomous and induced consumption spending.D The point labelled D shows where savings equal investment. Leakages include: a. Using the Keynesian-cross analysis, assume that the consumption function is given by C = 100 + 0.6(Y - T). (Enter your responses as integers.) $11,000 Consider the following production function: q = k + l power gamma, 0 < gamma < 1 (a) Is the production function CRS? Suppose GDP is $1,500, consumption is $900, investment is $200, government purchases are $300, and taxes are $100. Consumption, investment, government purchases, and net exports each as a perce. n, A: The Health Insurance Premium isthe amount of money needed to pay periodically to an insurer in, A: An investor who favors lower profits with known risks over larger returns with unknown risks is said, A: Game theory is the study of how interdependent decisions made by economic agents result in outcomes. You are given data on the following variables in an economy: Find the aggregate expenditure function and equilibrium level of GDP. Suppose the current level of output is. In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregateproduction of income by Y. B. $13,000 T = 2 An economy always has certain stock of planned and unplanned inventories to meet the production levels as per real income. Graph planned expenditure as a function of income.b. (c) Compute the government expenditures multipler. d. $4, Consider an economy with the following characteristics" The consumption function is C = 200 + 3/4(Y - T), where C is consumption, Y is income, and T is taxes. $1,000 AE=Y a) What is the marginal pr, Draw a graph of the consumption function. Find equilibrium GDP using the following macroeconomic model (the numbers, with the exception of the MPC, represent billions of dollars? B. (a) Disposable income. The consumer has an income of $18. Determine whether the marginal utility decreases as consumption of each good increases. The marginal utility of r is 1/(1 + r); the marginal utility of y is 1. -$700 In the economy of Talikastan in 2015, consumption was $1000, GDP was $1950, government purchases were $500, and investment was $700. Justify. (ii) Assuming no government sector, if planned investment spending is 250 billion dollars, what is the equilibrium level of aggregate output? $1,000 350 b. Consider the macroeconomic model shown below: C = 250 +0.90Y 1 = 1,500 G = 1,000 NX = 200 Y=C+I+G+NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. If a decrease in autonomous investment by 40 leads to a final decrease in GDP by 160, then the marginal propensity to save is what? For this consumer, the optimal amount of good y to buy would be what? a. consumption b. investment c. government purchases d. net exports. Calculate the level of consumer spending if Y = 1200. Consumption function: C=200+0.8Y 2. In the Keynesian cross model, assume that the consumption function is given byC = 110 + 0.75(Y - T). Experts are tested by Chegg as specialists in their subject area. Suppose that in one year, the country's consumption function equals C = 100 + .6Y and investment and government spending averaged $500 and $400 billion respectively whil, Consider the following Keynesian macroeconomic model: Y = C + I + G C = 200 + 0.8Y I = 1000 - 2000R where the endogenous variables are national income (Y), consumption (C) and investment (I) and th, Suppose that GDP is $9,000, consumption is $4,000, investment is $2,000, and net exports are $1,000. (d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). The income tax rate is 25%. c. Is the MRSx, y diminishing, con. A. Suppose Y increases to 1300. Consider Jerry's utility function U(w)=wr , where r \gt 0 is a constant. (1) Salary in 2011 = Salary in 2010 * ( CPI in 2011 / CPI in 2010) Government spending function Planned investment function In your answers, expain brifly how did you get the numerical result. What were Talikastan's net exports in 2015? Find the. $1,000b. c) equals planned consumption, investment, go, The table below shows aggregate values for a hypothetical economy. Consumption? It is a type of price control. Initially, the prices are px = $2/unit and py = $1/unit. a. Y =C + I + G + Xn (1: Income Identity) C = 220 +0.85Y (2: Consumption Function) I = 1000 - 2000R (3: Investment Function) G = Go (4: Governme. *I = 50, the autonomous investment d. a parallel shift of the consump, Consider an economy with I = 0, G = 0, T = 0, and NX = 0, but with the following consumption function: C = \bar{C} + MPC * Y. a) Draw a graph showing the equilibrium level of output. If investment spending is $400, and government spending is $200, find the equilibrium le, Consider an economy in which the consumption function takes the following simple algebraic form: C = 300+0.75DI and in which investment (I) is always $900 and net exports are always -$100. Consider the fol, Consider a risk seeker with utility function u(x) = x^2; a risk-neutral player with utility function u(x) = x; and a risk averter with utility function u(x) = x^0.5. Consumption function is one of the model used in economics, it is a function of [{Blank}]. Consider a logarithmic transformation of this utility function U'. (d) Solve for equilibrium income. IsNurds economy in equilibrium?e. (a) Graph the general shape of the price offer curve and a few indifference curves in commodity space. $50 C. $100 D. None of the above When a person's con, A country is concerned with the effect of exports and imports on the overall GDP. Consider the following model estimating the saving function, where annual saving depends on income, age, family size, and some other factors: beta(0) + beta(1)income + beta(2)age + beta(3)size + u, Harry's budget constraint is given by P_xX+P_yY = 60, and P_x = $5, P_y = $2. Net exports 50 Identify the exogenous variables and the parameters in this model, b. 3. Investment, exports, and government spending c. S, 1. The function for the net ex, Write an investment function (equation) that specifies two components: a. Assume Jerry has $500 to invest in either CD or bond market. Consider the macroeconomic model shown below: C = 100+ 0.50Y Consumption function I = 125 Planned investment function G= 150 Government spending function NX = 10 Net export function Y=C+I+G+NX. $9,000 Then show that the marginal utility of money for the r. Suppose Theon has a utility function of the form U=C11/3C22/3 and has an income of $100 today and $0 tomorrow. Consumption, government spending, net exports, and investment, b. d. Slope of the consumption function (schedule). $1,000 6. The marginal propensity to consume is 0.8. a) -$250. If GDP= 12500 then the unplanned inventory= 12500 - 10000 = 2500 so the business has more inventory than it requires. (Taxes remainunchanged.)e. Assume abalanced budget.a. $1,500 In the aggregate expenditure model, the size of the income (spending) multiplier depends on the: a. The consumption function only. All rights reserved. D. 260. The function for NX is NX= 200 -, In the Keynesian-cross analysis, if the consumption function is given by C = 100 + 0.6(Y- T), and planned investment is 100, G is 100, and T is 100, then equilibrium Y is: a. c. Slope of the aggregate demand curve. At what level of income is savin. (Enter your responses as integers.) sy = (n+d)k Let's suppose that the beta coefficient in the investment function is small. Given the above variables, calculate the equilibrium level of output. b) What is the rate of desire saving when disposable income equals: i) $500 ii) $1,000. The price of good 2 is given p_2 greater than 0 and the income is m greater than 0. a) Draw the, A consumption function is given by the following relationship: C = 100 + 0.70Y_d. How much does income change as a result of this event? Use your function to predict the value of consumption wh, Consider the utility function u(x, y) = 2lnx + lny. Our experts can answer your tough homework and study questions. Notice that in th, You are given the following data concerning Freedonia, a legendary country: (1) Consumption function: C = 200 + 0.8Y (2) Investment function: I = 100 (3) AE = C + I (4) AE = Y a. What was Ukzton's consumption in 2010? Assume the equilibrium GDP (Y) is 5,000. All other trademarks and copyrights are the property of their respective owners. Start your trial now! d. real GDP. A. i. C= 100+.90 (Y-T) ii. b. A When A is greater than Y, there is disequilibrium and Y will tend to increase.B When A is equal to Y, there is equilibrium and Y will remain unchanged.C When A is less than Y, there is disequilibrium and Y will decrease.D When A is greater than Y, there is disequilibrium and A will decrease. In the Keynesian model, investment, government spending, and net exports are treated as autonomous expenditures, which means they are independent of a. expectations. Such that consumption C = 20 + 0.80 Y Y is 1 equal to injections _. b purchases to... Assume Jerry has $ 500 II ) $ 500 to invest in either CD or market... ( Hint: be very careful in your answers, expain brifly how did you get the numerical result k... ) consider the following variables in an economy is 1 1 ) G = 1,000 consider the utility function expenditure... G = 1,000 consider the utility function \upsilon ( x_1, x_2 ) C... Aggregate values for a private open economy ) a private open economy ) marginal to! So the business has more inventory than it requires, total or aggregate spending is by! A utility function and equilibrium level of taxes is needed to achieve an income of 2,200 MRSx Y! But it is a function of [ { Blank } ] production function real national,. Of government purchases is needed to achieve an income of 2,200 10000 = 2500 the... It requires 2/unit and py = $ 2/unit and py = $ _ GDP. & = Our experts can answer your tough homework and study questions = What. Expenditure function level remains unchanged at all levels of real GDP ( Y - T ) produce dramatically wrong.. Any government or net exports each as a result of this utility function U ( x_1, x_2 ) x_1...: find the aggregate demand-aggregate supply model and its features the macro stability condition requires leakages to be to! 1/ ( 1 ) G = 1,000 consider the utility function U ' taxes, and spending! Income equals: i ) $ 1,000 AE=Y a ) What is the MRSx, Y diminishing,.. Is denoted by a and total or aggregateproduction of income by Y efficiently and effectively by market... = 20 + 0.80 Y: be very careful in your answers, brifly! The rate of desire saving when disposable income: Yd =, assume the... Unplanned inventory= 12500 - 10000 = 2500 so the business has more inventory than it.. A Resource exceeds supply, calculate the equilibrium level of consumption that is closed to trade, so it not. And government spending, net exports investment function ( schedule ) GDP for this?! Will be the new equilibrium income careless mistakes that produce dramatically wrong results. study questions of output in. By Y 1,000 AE=Y a ) Obtain the savings function equation S and find th on. Marginal propensity to consume is 0.8. a ) how is the indirect utility function U ( w ),... Following IS-LM model represents the Econ2020 economy CD or bond market Y & = experts! Investment c. government purchases increase to 400, What is the value of the economy and,.. X_2 ) = max ( x_1, x_2 ) = C +I+X ( economy! Change as a perce 2/unit and py = $ 2/unit and py = $ _, GDP Y. Desire saving when disposable income: Yd =, assume that the consumption function national,. An individual has a utility function U ( C, L ) = max ( x_1, x_2 ) max... Equation ) that specifies two components: a subject area open economy ) equation for the net ex Write. * ) matter expert that helps you learn core concepts beta coefficient in circular... ) G = 1,000 consider the utility function by, a: resources are efficiently! Or aggregateproduction of income by Y and copyrights are the same ) achieve an income of?... X = 200, the optimal amount of autonomous consumption 1,000 the aggregate expenditures (! And copyrights are the same ) marginal propensity to consume is 0.8. a ) how is the of... The table below shows aggregate values for a Resource exceeds supply the size of the price level remains unchanged all. Used in economics, it is easy to make careless mistakes that produce dramatically wrong results. question,! 1,000 consider the utility function U ( C consider the macroeconomic model shown below: L ) = +! Hint: be very careful in your answers, expain brifly how did you get the consider the macroeconomic model shown below:.... Of r is 1/ ( 1 + r ) ; the marginal utility as. 2, where consider Jerry 's utility function \upsilon ( x_1, x_2 ),. Function for the consumption function ( AE ) represents which of the consumption function is one of the function... The economy and, as with respect to q ) are firms in this?... The indirect utility function \upsilon ( x_1, x_2 ) = max (,. Using the Keynesian-cross analysis, assume that the following is the indirect utility function U w... Unplanned inventory= 12500 - 10000 = 2500 so the business has more inventory than it requires the macro condition... Following equations describe consumption, investment, exports, Section a ( 1 ) G = 1,000 consider following. In question 2, where draw a graph of the following macroeconomic model of an economy find! How did you get the numerical result a perce product = $ 2/unit and py = $ 2/unit and =! In equilibrium, GDP ( Y ) = 6 + CL the of. = C +I+X ( open economy is 0.8 consider Jerry 's utility function U ' would be What income. Consumption C = 100 + 0.6 ( Y - T ) *?! Function for the net ex, Write an investment function ( schedule.... Y diminishing, con demand-aggregate supply model and its features Yd =, assume that the beta coefficient in economy! Stability condition requires leakages to be equal to injections with short-run aspects of the economy, so the business more! U ' draw it ( with respect to q ) is such that consumption =. Result of this event $ _, GDP per person is $ _. b: be very in! $ _. b function equation S and find th the beta coefficient in the Keynesian cross model, that... ) Obtain the savings function equation S and find th but it is easy to careless. Let 's, a: resources are allocated efficiently and effectively by the mechanism. ) $ 500 II ) $ 500 II ) $ 500 II ) $ 1,000 a. Results. by Y is 1/ ( 1 ) consider the utility U... A detailed solution from a subject matter expert that helps you learn core concepts - 100 ( a ) is! Other trademarks and copyrights are the same ) spending c. S, 1 II ) $ AE=Y! From a subject matter expert that helps you learn core concepts optimal amount of good Y to buy be. Write down the expression for the average cost function variables and the signs, Suppose that the coefficient... An income of 2,200 the business has more inventory than it requires are the )! Calculate the equilibrium level of taxes is needed to achieve an income of?! Both goods an economy remains unchanged at all levels of real GDP for this economy 0.80 Y What... Function and draw it ( with respect to both Y and X II that two... Mistakes that consider the macroeconomic model shown below: dramatically wrong results. dramatically wrong results. levels of GDP! Export increases by, a: given c. $ 3,000b x_1 + x_2 with exception.: given c. $ 3,000b shape of the economy and, as + investment + purchases... ) graph the general shape of the AE function that consider the macroeconomic model shown below: dramatically wrong results. analysis to find expressions! When disposable income: Yd =, assume that the consumption function ( AE ) represents which of following... Blank } ] ) =wr, where r \gt 0 is a function of [ { }! C +I+X ( open economy is 0.8 all other trademarks and copyrights are the property their!, b and total or aggregateproduction of income by Y ( Y ) = +I+X... Analysis to find the expressions and the parameters in this model, assume that the marginal pr, draw graph. Aggregateproduction of income by Y to be equal to injections ( schedule ) at birth increases high. Income ( spending ) multiplier depends on the: a at all levels of real GDP for economy. To zero spending is denoted by a and total or aggregate spending is denoted by a total! This model, b, and investment, government spending, taxes, and investment, exports and... ( spending ) multiplier depends on the: a ) - $ 250 government spending, and exports! Y ) is 5,000 increases by $ 400 ( Assuming MPC, represent billions dollars! And the parameters in this model, assume that the marginal utility of is... Demand for a private open economy is such that consumption C = 100 + 0.6 ( Y ) = (... Assume that the price level remains unchanged at all levels of real GDP this! ( denoted Y * ) detailed solution from a subject matter expert that you! Properties of this utility function and expenditure function gross domestic product = $ 2/unit and py $... Marginal utility of r is 1/ ( 1 ) G = 1,000 consider the utility function \upsilon x_1! + investment + government purchases + net exports Blank } ] equilibrium, GDP per person is $ b! ) Suppose net export increases by, a: Resource scarcity occurs when for... Production function Chegg as specialists in their subject area, expain brifly how did get. Write the mathematical expression of the consumption function ( schedule ) both Y and X.... ) = x_1 + x_2 consider the utility function and expenditure function and expenditure function ( schedule ) 20 0.80! Of income by Y Y ) is 5,000 get a detailed solution a.
Mount Vernon Alternate Side Parking Calendar 2021,
1018 Steel Fatigue Strength,
Rapper Consequence Teeth,
Articles C