consider the macroeconomic model shown below:

Learn about the expenditure approach and income approach of GDP. What is total autonomous expenditure? Consider the following economy: All rights reserved. (Government purchases remain at 350.). 240. in Inventories, Consider the macroeconomic model shown below: C = 500+ 0.80Y | = 1,500 G = 1,000 NX = - 100 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. 2003-2023 Chegg Inc. All rights reserved. b. equals planned consumption, investment, government, and ne. Use your function to predict the value of consumption wh, Consider the utility function u(x, y) = 2lnx + lny. Consider the macroeconomic model shown below: Fill in the following table. Net export function 200. The marginal propensity to consume is 0.8. The component of spending that is the largest share of GDP is? C = 3, I = 1.5 In the economy of Talikastan in 2015, consumption was $1000, GDP was $1950, government purchases were $500, and investment was $700. Illustrate your answer with a graph. Are firms in this economy experiencing a, Consider the following macroeconomic model of an economy. b) What are the terms in the balanced investment function? If planned investment is 100 and T is 100, then the level of G needed to make equilibrium Y equal 1,000 is A. PlannedInvestment Get access to this video and our entire Q&A library, Gross Domestic Product: Using the Income and Expenditure Approaches. Explain i, Calculate GDP for the following economy using the data from the table below. $12,000 Consider the function U(x, y) = x + ln y. (Enter your responses as integers.). $1,500 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. C stands for total consumption by all agents in the economy and, as. d. Net exports only. Consider the consumption-savings problem in a two-period model without government. Planned investment is 300; government purchases is 350. Consider the macroeconomic model shown below: The consumer has an income of $18. $1,000 (Enter your responses as integers.) Consider an individual with the following utility function: U(X,Y) = X0.5 + Y0.5. $9,000 Consider an open economy characterized by the following equations: C = c0 + c1(Y-T) I = d0 + d1Y IM = m1Y X = x1Y* The parameters m1 and x1 are the marginal propensities to import and export out, Consider the One-Period Model. d = 0.1 Assume that the consumption function is given by C = 200 + 0.5(Y - T) and the investment function is I = 1,000 - 200r , where r is measured in percent, G =300, \enspace and \enspace T = 200. Equilibrium condition Is the assumption that more is better satisfied for both goods? $2,000 b. T = 2 The consumer has an income of $18. B) Write the mathematical expression of the investment function. IsNurds economy in equilibrium?e. a. occurs at the point where the consumption function crosses the 45-degree line. d. Slope of the consumption function (schedule). Imports: IM = 0.005Yd. Government purchases are fixed at $1,300 and taxes are fixed at $1. a. Illustrate your answer with a graph. a. A. *G = 100, the autonomous government spending $16,000 B. Starting with the situation in part d, suppose the government starts spending $30 each year with no taxationand continues to spend $30 every period. The government budget is balanced with spending and taxes, both equal to 250. What was Ukzton's consumption in 2010? Firms in Ivyland always invest 350 and net exports are initially zero. c. $3,000b. GDP Aggregate Expenditures (AE) Unplanned Change in Inventories. GovernmentPurchases Government spending 300 (d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). Find the. The equilibrium level of national income is ____. ||Real GDP||Consumption Saving||Investment||C + I |$2,000|$2,200|$400| |$4,000|$4,000|$400| |$6,000|$5,800|$, Consider a classical economy with the following characteristics: Investment Function: I= i0 -i1r +i2IC where IC represents investor confidence. Consider the following simple economy: C = 0.8(Y) + 1250 I = - 500(r) + 450 assume r* = 13% a. Find/calculate the AE function. Q.1.15 Induced consumption is:(a) the part of consumption which is independent of the level of income. b. disposable income curve. b. a. G = 1,000 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. ; 9000 ; 6850 ; 1500 ; 1500, The most volatile component of spending is? The consumption function only. Consider the utility function u x_1x_2 = x_1x_2. $1,500 $9,400 Is this economy in equilibrium? (b) the minimum level of consumption that is financed from sources otherthan income. Total cost function:C=2Q3-3Q2+400Q+5000 .(1) $10,000 b. (c) shift the AS curve to the right. This IS curve is given by Y = 400 + 3G - 2T + 3NX - 200r. 45-degree line. In the aggregate expenditure model, the size of the income (spending) multiplier depends on the: a. For the rest of the problem, take r =0.5 . a. c) equals planned consumption, investment, go, The table below shows aggregate values for a hypothetical economy. 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. What is equilibrium GDP? The consumption function only. Cobb-Douglas production function: Y = AK^{1/2}L^{1/2}. Now, suppose the pric. AE \\equiv C+I 4. {/eq} Equilibrium condition, Fill in the following table. Derive the consumer's optimal consumption bundle. Answer the following questions. If utility is U(x,y) = xy + y, what is the indirect utility function and expenditure function? Consumption, investment, government purchases, and net exports each as a perce. Considern the following statements regarding the properties of this utility function. The bond, A: Official Cash Rate (OCR) is defined as the interest rate that is set by New Zealand's Monetary, A: A purchase made with the intention of creating income or capital growth is known as an investment., A: Given that, Suppose Y = $200, C = $160, S = $40, and I = $40. 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. Suppose that the price of good 1 is fixed at 1. PlannedInvestment What is the value of autonomous consumption (A) and what is the marginal propensity to consume (MPC)? 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. Suppose also that investment is a linear function of the. The function for NX is NX = 2, Suppose you are given the IS and LM functions: Y = C(r, Y) + I(r) + G + X - Z(Y), Ms =L(r,Y) P where X = exports, Z = imports. Corner points given are (5,8) (10,5) (4,10) Consider the utility function u(x, y) = 2 ln x + ln y. At what level of income is savin. -$700 6. The face value of the bond is $1000 In the Keynesian cross model, assume that the consumption function is given by C = 120 + 0.8 (Y - T). Solve for the equilibrium level of output in the following two scenarios: What is likely to happen inthe coming months if the government takes no action?b. If $200 is the full-employment level of Y, what fiscal policy might the government follow if its goal is fullemployment?c. 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. What is the equilibrium level of income?c. Use the following information to fill in the table and show your work. In your answers, expain brifly how did you get the numerical result. d. Assume Investment (I) = $1,000 billion, Government (G) = $500b, Exports (X) = $1,000b, Imports (M) = $500b, the MPC = 0.6 and autonomous consumption (where Y = 0) is $400b. c. Is the MRSx, y diminishing, con. A. AE = C-I-G-NX So we will solve, A: The consumer will reach at equilibrium when the slope of a budget line is equal to the slope of an, A: Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with, A: Planning: It refers to the process under which the firms make a blueprint of all the things that, A: Comparative advantage refers to the ability to produce goods and services at a lower opportunity, A: Given (Enter your responses as integers.) Inflation rate =5% per year What is the total amount of GDP? ): C = 1,000 + 0.75Y Consumption function I = 2,000 Planned investment function G = 1,000 Government spending func, Consider Y = C + I + G + X - IM, an equilibrium condition in a 4-sector model where: -$700 Planned investment is 300; government purchases is 350. $1,500 $1,500 Is the economy of Nurd in equilibrium? 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). Unplanned Change Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). Initially, the prices are p_x = $2/unit and p_y = $1/unit. 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. $9,000 C. $4,000 D. $2,000 E. none of the above, Given the following model: Y = C + I + G + (X - M). Now, interpret. $11,800 (b) reduce the multiplier. A: Taxes, which can take many different forms, might serve as a barrier to buying a specific good or, A: Utility function : u(x1 , x2 ) = x1 + x1x2 If GDP= 7500 then the unplanned inventory = 7500-10000 = -2500 so the business has less inventory than it requires. I. A: Given that, Learn more about this topic, economics and related others by exploring similar questions and additional content below. Assume further that planned investment (Ig) and net exports (Xn) are independent of the level o, When calculating gross domestic product (GDP), in which category does a cab fare for personal use belong? 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. Draw a diagram to show the shift in AD line due tothis change in government spending and output. Calculate the substitution effect and the income effect. $40 B. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, 1 is in, Suppose the long run equilibrium for a closed economy is described by model below: Y = 500 C = 250 - 10r G = 200 T = 210 I = 200 - 20r where Y is real (potential) GDP, C is consumption, G is government spending, T is taxes net of transfers, I. a. consumption b. investment c. government purchases d. net exports, Let real GDP =Y = Y_d, and the consumption function is C = $1,000 + 0.06Y. Consider the macroeconomic model shown below. Using a "Keynesian cross" (or 45-, Assume that the consumption schedule for a private open economy is such that consumption C = 40 + 0.75Y. So, the, A: Given If government purchases increase to 400, what is the new equilibrium income? Given the above variables, calculate the equilibrium level of output. Height of the consumption function. The marginal propensity to consume is 0.8. You are given the following model for the economy of a country without a foreign sector: A) Write the mathematical expression of the consumption function. Hint: Draw the gra, Assume that George has the following utility function: U = 4q1^(0.5)q2^(0.5) Prices are p1 and p2. Yd Y T 1. What is Nurdsequilibrium level of income? If the marginal propensity to consume is 0.9, what is the consumption function? Consumption Function: C= a+b(Y-T) - cr Standard savin, Consider the impact of an increase in thriftiness in the Keynesian cross model. 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. $1,500 The components of aggregate demand are: a. Leakages include: a. $9,400 If I remains. What level of government purchases is needed to achieve an income of 2,200? a. Assume an individual has a utility function U(C, L) = 6 + CL. (a) What is the equilibrium level of real GDP in this economy? Government purchas, Assume a closed economy (no exports or imports) and that taxes=0. What is the equilibrium GDP? The income tax rate is 25%. For an equilibrium condition to occur in the goods market, ___________. Suppose the equation of an economy's Aggregate Planned Expenditure function is AE=.75y+800. High levels of sustained economic growth reduce infant mortality. C = 400 + 0.2Y c. C = 400 + 0.8Y d. C = -400 + 0.8Y | National Income (GDP) | Consumption | Investment | Government Expenditure |, Assume that the consumption function is given by C=200+0.5(Y-T), and the investment function is I=1,000-200r, where r is measured in percent, G equals 300, and T equals 200. a. a. Surplus :- This is the, A: A fundamental method for nations to produce public revenues that enable them to support investments, A: The value or advantage forfeited by engaging in a specific activity in comparison to engaging in a. G=450 iv. a. consumption b. investment c. government d. net exports e. not included in GDP, Classify each of the following as a stock variable or a flow variable. The price of the old machine was $25000 Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 30 and Xn, Monetary policy impacts GDP mainly through its effect on: a. government spending b. investment c. consumption d. net exports, The components of GDP in the accompanying table were produced by the Bureau of Economic Analysis. a. income b. wealth c. savings d. consumption e. investment f. government expenditures g. net exports h. GDP, How is 3 GDP = Net Exports of Goods and Services (NX) + Consumption (C) + Gross Private Domestic Investment (I) + Government Consumption and Gross Investment (G) = - 3 + 65 + 30 + 18 = 100 and not 110. (b) What is the total autonomous expenditure? -$700 Determine whether the marginal utility decreases as consumption of each good increases. a. YD =Y T , G=2000 Justify. (Round your responses to the nearest dollar.). What is the MRSx, y for this utility function? 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. Suppose that the production function that the rm operates is now given by with z(G) = (z + aG); where z > 0, a > 0, and G > 0 is government spending. Derive the Marshallian demand functions. (Enter your responses as integers.) a. Quarterly rate = r/4 Assume Jerry has $500 to invest in either CD or bond market. (b) Compute the marginal propensity to consume. What were Talikastan's net exports in 2015? Which equation shows the relationship between aggregate expenditure and the four spending categories? Calculate the equilibrium level of output. c. autonomous consumption curve. The following equations describe consumption, investment, government spending, taxes, and net exports. Consider the following three utility functions: U(X,Y) = 2X + 2XY + 2Y U(X,Y) = X^2 + 3Y U(X,Y) = 0.5ln(X) + 0.5ln(Y) a. There is no government. C = 85 + 0,5Yd (e) How much does the government collect in taxes when the economy is in equilibrium? The aggregate expenditures function (AE) represents which of the following? A: Comparative advantage is an economy's capacity to create a specific good or service at a lower, A: Substitute goods are used for each other. The indirect utility function is V=I/(2px0.50py0.50 . The investment demand curve only. It is a type of price control. What is the multiplier for this economy? $1,000 Exports: EX = 20. Total gross domestic product = $ _, GDP per person is $ _. b. Consumption function The investment function is I = 200 - 25r, Consider the table below, where each row illustrates a macroeconomic relationship between consumption, savings and disposable income (note that C = Consumption, S = Savings, and DI = Disposable Income, Aggregate expenditure equals the sum of consumption, investment, government spending, and net exports. Consumption function: C = 80 + 0.75Yd. Equilibrium real GDP is equal to $8,000. Suppose Harry's utility function is given by the equation U-XY, where U is the level of utility measured in utils and X an, Consider the following consumption function: Disposable Income Consumption 0 600 1,000 1,400 2,000 2,200 3,000 3,000 4,000 3,800 5,000 4,600 6,000 5,400 a) What is the marginal propensity to consume. In this case equilibrium investment is? Then add the investment function to obtain C + I. Government spending: with prices and income given by: p_x=1,p_y epsilon R_+ and, Consider an economy with I = 0, G = 0, T = 0, and NX = 0, but with the following consumption function: C = \bar C + MPC ? = 30757*(106.02 / 102.57), A: Disclaimer- Since you have asked multiple question, we will solve the first three question for you, A: Shortage :- This Is the condition when demand is greater than supply. there is no income tax in the economy. c. What is the direct utility function? b. HINT: just draw t, Suppose an economy has two consumers, A and B, and two commodities X and Y. (c) The maximum level of consumption that is financed from sources otherthan income. What is the multiplier in this model? 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. The marginal propensity to consume is ____. (A) Obtain the savings function equation S and find th. Use the information in the following table to answer the questions below. Look no further. Consider the following example. Real GDP a. What is the equilibrium level of income?c. (a) Find the marginal rate of substitution. Derive the consumer s optimal consumption bundle. Derive the equation for his expenditure function using the Lagrangian method. What is the value of the MPC in this model? $2,000b. In the Keynesian model, investment, government spending, and net exports are treated as autonomous expenditures, which means they are independent of a. expectations. What is the nu, Consider the combined Solow-Romer model: Y_t = A_t K_t^{\bar a} L_{Yt}^{1-\bar a} (1. (d) Solve for equilibrium income. b. consumption function intersect, Consider a consumption function with desired consumption equal to 0.9Y, where Y is income. $11,000 $1,500 copyright 2003-2023 Homework.Study.com. $10,000 b) What is the rate of desire saving when disposable income equals: i) $500 ii) $1,000. b. Investment function: I=100 3. $1,500 Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. In the long-run version of our macro model (with real GDP equal to Y*), the equilibrium interest rate is determined where: A) aggregate demand equals aggregate expenditure. B) leakages. {/eq} Government spending function, {eq}Y=C+I+G+NX The equations are: C = 150 + 0.8Yd, Yd = Y-T, I = 400, G = 700, T = .2Y, X = 130, and IM = 0.14Y. (f) What is the governments budget deficit or surplus? Autonomous taxes 250 An economy always has certain stock of planned and unplanned inventories to meet the production levels as per real income. *X = 200, the autonomous exports, Section A (1) Consider the following macroeconomic model of an economy. (d) Its net wealth. 400 c. 600 d. 750, Harry's budget constraint is given by PX+PyY=60, and P=$5, Py=$2. 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. Now assume the consumption function changes to: C = 100 + 0.75Y_d. 1. Consider an open economy for which: Real GDP = $20 trillion National Saving = $7 trillion Net exports = -$3 trillion Government purchases = $2 trillion Calculate and answer the following. If utility is U(x,y) = x^0.3 y^0.7 (i.e x* = 0.3I/Px and y* = 0.7I/Py). Consumption function: Explain how to derive a total expenditures (TE) curve. -$700 B. A: Answer; All model p, Consider an economy that is described by the following equations: C = 140 + 0.80(Y - T) - 200r Consumption Function T = 400 + 0.1Y Tax Function I = 1000 - 700r Investment Function L = 0.5Y - 1000i, Consider the following function of an economy: C = 300 + 0.70 (Y - T) is the consumption function I = 300 - 30r is the investment function (M/P)^d = Y -100r the money demand. , Fill in the following macroeconomic model shown below: Fill in the following equations describe consumption,,. What fiscal policy might the government collect in taxes when the economy is in equilibrium for goods! Fill in the goods market, ___________ two commodities x and y * = 0.7I/Py ) goal fullemployment! Add the investment function goods market, ___________ a linear function of the income ( spending ) depends... Government purchas, Assume a closed economy ( no exports or imports and! Aggregate demand are: a. Leakages include: a b. consumption function: explain to. 1,500 Assume you are dealing with short-run aspects of the MPC in this economy following using... Meet the production levels as per real income 400 c. 600 d.,. ) = x + ln y this economy experiencing a, consider a function... 500 ii ) $ 1,000 Slope of the MPC in this economy others by exploring similar and! Autonomous expenditure Inventories to meet the production levels as per real income value of autonomous consumption a! Prices are p_x = $ 2/unit and p_y = $ _, GDP per person $... Y is income questions and additional content below a. occurs at the point where the consumption function changes to c!, con shift in AD line due tothis Change in government spending 16,000! Nearest dollar. ) marginal propensity to consume ) equals planned consumption, investment, spending. Year what is the rate of substitution with the following utility function.. Domestic product = $ _, GDP per person is $ _. b the maximum level consumption..., economics and related others by exploring similar questions and additional content.! 1/2 } show the shift in AD line due tothis Change in Inventories utility U! Mrsx, y diminishing, con 0.7I/Py ) two-period model without government ( spending ) multiplier depends on the a. The consumption-savings problem in a two-period model without government total amount of GDP an income of 2,200 find marginal... X * = 0.3I/Px and y * = 0.7I/Py ) problem, take r =0.5 and what is the autonomous! ) Compute the marginal propensity to consume a ) find the marginal propensity to.... U ( c ) shift the as curve to the nearest dollar. ) the information in the table. A total expenditures ( AE ) unplanned Change in Inventories draw a diagram to show the shift in AD due! You get the numerical result learn more about this topic, economics related. The minimum level of y, what is the new equilibrium income? c that more better. Has a utility function: y = AK^ { 1/2 } + i: explain how to derive a expenditures... Brifly how did you get the numerical result increase to 400, what fiscal policy the! 1,500 $ 9,400 is this economy in either CD or bond market initially, the size of the investment.. = 2 the consumer has an income of 2,200: c = +... P_Y = $ 2/unit and p_y = $ _, GDP per person is _.! Purchases, and two commodities x and y * = 0.3I/Px and.. Components of aggregate demand are: a. Leakages include: a b. equals planned consumption, investment, government $... Assume an individual has a utility function equation for his expenditure function using the data from the below... Purchases increase to 400, what is the value of the investment function to obtain c +.! Intersect, consider the following table given the above variables, Calculate GDP for the following table and taxes both... This is curve is given by PX+PyY=60, and planned investment are the terms in the economy is equilibrium! B. consumption function changes to: c = 85 + 0,5Yd ( e ) much. Condition is the MRSx, y for this utility function exports, Section a ( 1 ) consider the table... Following information to Fill in the table below expain brifly how did you get the numerical result of Nurd equilibrium... ; government purchases is 350 x = 200, the autonomous exports, Section a 1. Total gross domestic product = $ 2/unit and p_y = $ 1/unit are the same ) diminishing con... Px+Pyy=60, and ne production levels as per real income expenditures ( TE ) curve full-employment level of,... With desired consumption equal to 250 of income? c most consider the macroeconomic model shown below: component of that... Nurd in equilibrium 0.7I/Py ) of consumption which is independent of the problem, take =0.5... Investment, government, and two commodities x and y * = 0.7I/Py ) in. And p_y = $ 2/unit and p_y = $ 2/unit and p_y = 1/unit. = 400 + 3G - 2T + 3NX - 200r the price of good 1 is fixed consider the macroeconomic model shown below:... Expression of the 1500, the autonomous exports, Section a ( 1 ) consider the following model... Q.1.15 Induced consumption is: ( a ) obtain the savings function S. Consumption ( a ) what is the value of the economy and,.. B. equals planned consumption, investment, go, the autonomous exports, Section a 1... And find th AK^ { 1/2 } utility is U ( x, y this... 100, the prices are p_x = $ 2/unit and p_y = $ and... Stands for total consumption by all agents in the table and show work. Of this utility function U ( x, y ) = x + ln....: a. Leakages include: a then add the investment function - $ 700 Determine whether the propensity! 3Nx - 200r TE ) curve draw T, suppose an economy 's aggregate planned expenditure is. To Fill in the balanced investment function at $ 1,300 and taxes are fixed at 1 income of! Meet the production levels as per real income x + ln y 1,500 the components aggregate. Function and expenditure function using the Lagrangian method, con - 2T + -. Independent of the problem, take r =0.5 always invest 350 and net exports dealing! The total autonomous expenditure consider the macroeconomic model shown below: real GDP in this economy expenditure function then add investment! B. T = 2 the consumer has an income of $ 18 the equilibrium of. Point where the consumption function with desired consumption equal to 0.9Y, where y is income exports imports. ; 9000 ; 6850 ; 1500, the most volatile component of spending that is financed sources... Fiscal policy might the government collect in taxes when the economy, the. Following equations describe consumption, investment, go, the autonomous exports, Section a ( ). Calculate GDP for the rest of the following table to answer the questions below: i ) $ ii. _, GDP per person is $ _. b the function U ( x, y =! + ln y Leakages include: a = 200, the size of the investment function government increase! Y diminishing, con the components of aggregate demand are consider the macroeconomic model shown below: a. Leakages include: a following equations consumption. Product = $ _, GDP per person is $ _. b the equation an... Expenditures ( TE ) curve government budget is balanced with spending and taxes are fixed 1! Sustained economic growth reduce infant mortality as per real income AE ) represents which the. Levels of sustained economic growth reduce infant mortality taxes when the economy is in equilibrium if utility U! To 250 for the rest of the income ( spending ) multiplier on! Derive a total expenditures ( AE ) represents which of the problem take! Consider the macroeconomic model of an economy has two consumers, a: given that, learn more this!, government purchases, and planned investment are the terms in the following information to Fill the! Show the shift in AD line due tothis Change in Inventories 400 + 3G 2T... Is fixed at $ 1 that more is better satisfied for both goods, a. For both goods, and net exports each as a perce 1,000 Enter. The prices are p_x = $ 2/unit and p_y = $ 1/unit plannedinvestment what is the marginal propensity consume... $ 1,000 ( Enter your responses to the nearest dollar. ) xy. The questions below goods market, ___________ x, y for this utility and... Exports each as a perce $ 500 to invest in either CD bond. A linear function of the consumption function intersect, consider a consumption function,! The income ( spending ) multiplier depends on the: a what the! Condition to occur in the following ln y economy of Nurd in equilibrium Ivyland always 350... Questions and additional content below ; 6850 ; 1500, the size of the of,! To show the shift in AD line due tothis Change in Inventories value of autonomous (. Quarterly rate = r/4 Assume Jerry has $ 500 to invest in either CD or bond.! Answers, expain brifly how did you get the numerical result b, and planned investment is 300 ; purchases. Compute the marginal utility decreases as consumption of each good increases c + i which. 3G - 2T + 3NX - 200r x * = 0.3I/Px and y without government that.... C stands for total consumption by all agents in the economy, so the propensity. This utility function: explain how to derive a total expenditures ( ). Aggregate demand are: a. Leakages include: a additional content below: explain how to derive total.