Assume that marginal propensity to consume is 0.75. autonomous consumption is 100 units(consumption function therefore is as follows: C=100+0.75 Y) . Calculate =)Multiplier b)Equilibrium output if Y=100 c)How much does equilibrium output change if autonomous consumption increases by 50 to 150 units(Hint:use multiplier)
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- Write down the Planner’s problem, as well as the Lagrangian. (Hint: There should be two constraints because aggregate consumption of each good cannot exceed the economy’s endowment.) Label the multipliers ϕ1 and ϕ2. What are the first order conditions of the Planner’s problem? (Hint: There should be 6.). Find the solution to the Planner’s problem and label the quantities (xpA; ypA) and (xpB; ypB). If we compare the first order conditions of the Planner’s problem to the first order conditions of a corresponding competitive equilibrium (CE), we can obtain a relationship between ϕx, ϕy, λ, px, and py so that the CE and the Planner’s problem give us the same solution. This is called decentralizing the Planner’s problem.Decentralize the Planner’s problem. (find the equilibrium prices and the value of λ so that the two problems have the same solution.) Can you relate this to the two welfare theorems?2) Economic Application of Integrals. a) Given the marginal propensity to import M' (Y) = 0.1 and the information that M = 20 when Y = 0, find the import function M(Y). b) Given the marginal propensity to consume C" (Y) = 0.8 + 0.1Y-1/2 and the information that C = Y when Y = 100, find the consumption function C(Y).Assume that Consumption is C = c(Y-T); Taxes T = tY; Investment / = -bi; and Government expenditure (G) is exogenous. Determine the multiplier for an increase in the tax rate.
- 6. Given the savings function S = (3Y2 +2Y)/ ( Y-1) a) Write the consumption function. b) Find the equilibrium level of income, if the consumption is 100. Please answer both subparts. I will really upvoteThe autonomous consumption expenditures and autonomous investment expenditures in an economy are $250 and $350, respectively. It is also observed that individuals spend 90% of their additional income on consumption. Using the information provided above, the aggregate expenditure function for this economy is: (Round your response for the intercept term to the nearest whole number and for the slope term to two decimal places.) The simple multiplier for this economy can be calculated as 10. (Round your response to one decimal place.) The value of the simple multiplier implies that a $200 decrease in the autonomous investment expenditures would lead to a $ in the equilibrium level of actual income. (Round your response to the nearest dollar.) increase AE = 600+ 0.9 Y decreaseIn the goods market when C(Yd) = c0 + c1Yd, the multiplier is bigger when:A. The marginal propensity to consume (c1) is smaller.B. The marginal propensity to consume (c1) is larger.C. The exogenous component of consumption (c0) is larger.D. The exogenous component of consumption (c0) is smaller.E. None of the above.
- If average income goes from $30,000 to $33,000 and consumption increases from $29,000 to $31,000, the marginal propensity to consume is Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. 67 b 1.5 1.06 0.96You are given the following data concerning Freedonia, a new republic. 1) Consumption is 200 when income is zero and the marginal propensity to consume is 0.6 out of every dollar increase in income 2) Investment function: I = 200 3) AE ≡ C + I 4) AE = Y Questions A. Derive the savings function? B. Graph equations 3) and 4) and solve for equilibrium income (Y). C. Suppose equation 2) is changed to I = 150. What is the new equilibrium level of income (Y)? By how much does the $50 decrease in planned investment change equilibrium income? What is the value of the tax multiplier?Consider the following demand components: Consumption described as a following: 100 million USD as an autonomous level of consumption plus 95% of disposable income spends on consumption. I = 30 G=15 T= 20 (a)Assuming goods market equilibrium, show equilibrium level of output in this economy. (b)How much output increase, if G increase from 15 to 20, show your calculations.
- Construct a consumption function from the data given here and determine the MPC.Suppose the MPC is 0.6. Beginning from equilibrium, investment demand rises by 30. (a) How much does equilibrium output increase? (b) How much of that increase is extra consumption demand?If the marginal prospensity to consume is 0.75, an increase in autonomous investment of 800.00 will result in a a) 3200 increase in the level of autonomous consumption b) 3200 increase in the equilibrium level of income c) 1500 increase in the equilibrium level of income d) 1300 increase in the level of induced consumption