Question

Homework #2 ECON 2301 MACROECONOMICS DR. J. CHRISTOPHER WREH, 1 (Ph.D) MVC-EON 2301-HW #2 WRITE ALL DETAILS (Formulas & Answers) to get full credit. The homework MUST be numbered in order and written clearly and neatly 1) The following information were taken from the Economic Data of a country Gragea: CONSUMPTION -- $2000, INVESTMENT--- $3200, GOVERNMENT SPENDING-- $5000, EXPORTS- $9000, Imports--- $3000, NET EXPORTS- $6000 AND Money from Abroad but own by citizens of Gragea --- $4000, and Consumtion Allowance (Depreciation) = $1000, CALCULATE : WHAT IS THE GDP? 2) Using information in problem #1, what is the GNP? 3) Using the information in problem #1 what are the a) Net GDP? b) Net GNP? 4) Given Tax Multiplier (TM) is equal to 4 A) What is the MPC? B) What is the MPS? 5) Given Keynesian Multiplier (m) is 5 A) What is the MPC? B) The MPS? VIJIJDSD d d ddddddddddd 61 An Economist from Gordea gives you the following information about the country. He said that Consumption = $900, Investment = $300, Government Purchases $500, Exports $500, Imports $600. He also told you that the marginal propensity of Savings in this Economy is 20%. Using the keynesian Equation, calculate the Income (Y) of this economy. The Fed creates $100,000 in new money that is deposited in someone's checking account in a bank What is the maximum change in the money supply if the required reserve rationis 10 CING INFORMATION IN PROBLEM S, SUPPOSE the required reserve ratio is 5%, what is the mavi what is the maximum change in the money supply?

Answer 1

1)

2)

3)

4)

$tax\ multiplier=4\\ \frac{MPC}{1-MPC}=4\\ MPC=4-4*MPC\\ MPC=\frac{4}{5}=0.8\\ MPS=1-MPC=1-0.8=0.2$

5)

$keynesian\ multiplier=5\\ \frac{1}{1-MPC}=5\\ 1=5-5*MPC\\ MPC=\frac{5-1}{5}=\frac{4}{5}=0.8$