17. Keynesian consumption function: a) C = C + mpcy b) I = I c)t 18....
Student Full Name 12. (Post) Keynesian theory of the firm: the unit direct costs (UDC) are normally a) increasing b) decreasing with respect to the level of production because firms usually operate constant c below the level of full capacity 13. In the (Post) Keynesian markup pricing (Price (1 + markup) UDC), prices are: b) market-based and demand-determined a) administered by firms and cost-determined 14. Inflation rate CPI,-CPI, a) CPI Nominal Wages c) Cost of market basket in a given...
Solve 1. 2. 3. 4. 5. 1 Keynesian Cross Assume that households' consumption function is given by C(Y -T) 50+ 0.75(Y T), that firms' investment function is I(r) 150 10r, government spending is G 150, and the tax bill T 200. 1. What is the Marginal Propensity to Consume "MPC")? 2. What is the equilibrium level of real GDP in the goods market if the real interest rate is 5%? (Plug in r = 5 for 5%, rather than 0.05...
Please answer a, b, c, d 1. For the following question, assume that the consumption function is: C = 200+ 0.75(Y – T) The investment function is: I = 200 – 2.51 Government spending is fixed at G = 100 and the government has a balanced budget. The liquidity function is: L(Y,r) = Y – 10r Nominal money supply is 1,000 and the price level is equal to 2. a) Find the planned expenditure function and plot it on the...
B,c,d,e please solve Suppose in the economy autonomous consumption - $100, autonomous investmen $120, government purchases G-$400 lump-sum taxes = $70, transfers Tr-$20, exports Er $150 autonomous imports im = $30, marginal propensity to consume mpc = 0.8, proportional income tax rate 1-20%, marginal propensity to invest mpi-0.1, and marginal propensity to imports mpm-0.4 (a) For this economy calculate (i) the amount of autonomous spending: (ii) the value of the spending multiplier; (iii) the equilibrium level of output; (iv) the...
please show solutions also. Thanks Question 4 In a simple Keynesian model, assume that the marginal propensity to consume (MPC) is 0.5. a) Find the government purchases multiplier b) Find the tax multiplier c) If the government wants to increase equilibrium real GDP by $ 500 billion, how much should the government increase spending? d) For the same purpose, how much should the government decrease taxes? According to Ricardian equivalence, do you think the government estimate is correct (should the...
4. Keynesian cross and Keynesian multiplier: In the Keynesian cross, assume that the consumption function is given by C - 100 +0.5 (Y-T) Planned investment is 75; government purchases and taxes are both 100. a) Graph planned expenditure as a function of income. b) What is the equilibrium level of income? c) If government purchases increase to 110, what is the new equilibrium income? d) How big is the Keynesian government purchases multiplier in this example? e) What level of...
Question 2 In the Keynesian cross, assume that the consumption function is given by C = 150 +0.7 (Y-T) Planned investment is: I = 100 – 10 *r Government purchases and taxes are both 50. a. Graph consumption as function of income. b. Graph investment as function of the real interest rate. c. Suppose that the real interest rate is 5. Write the equation of the planned expenditure. d. Suppose that the real interest rate is 5. What is the...
The following table shows alternative hypothetical economies and the relevant values for the marginal propensity to consume out of disposable income (MPC), the net tax rate (t), and the marginal propensity to import (m). a. Recall that z, the marginal propensity to spend out of national income, is given by the simple expression Z-MPC(1-1)-m. By using this expression, compute z and the simple multiplier for each of the economies and fill in the table. (Round your response to two decimal...
In Econoland, let the amount of consumption that is independent of income is equal to 80; all expenditures are in billion US dollars. Investment in the economy is autonomous at 600. From any dollar change in national income, households use up ¾ of it to spend on consumption. Government spending is fixed at 300, and the tax rate is known to be 5%. The correct statement based on this case is Group of answer choices a. multiplier is 4 b....
10. In the Keynesian Cross analysis, if the consumption function is given by C = 100 + 0.6(Y − T) and planned investment is 100, G = T = 100, then equilibrium Y is: a) 350 b) 400 c) 600 d) 750 11. Assume that the money demand function is L(r) = 2200 − 200r, where r is the interest rate in percent. The money supply is 2000 and the price level is 2. The equilibrium interest rate is percent....