Macroeconomics Answers

If C=700+0.8Yd, I= 400, Tax=10%, & G= 200, then:

Derive equation for AD
Determine equilibrium value of output.
Calculate value of multiplier
Repeat first 3 parts if Govt. spending is increased to 300
Show changes through graph..

American middle classes found debt-free Household| A Quick Analysis of Consumer Debt Statics?

a. Assume that the reserve ratio in a country is 2%.
(i) Use a formula to calculate the simple money multiplier, show all steps involved in the calculation.


(ii) Suppose that in 2019 customers deposit $200 into their banks. Based on the simple money multiplier calculated in part (i), calculate the total amount which the money supply in the banking system will eventually increase to. Show all steps involved in the calculation.

(iii) Assume the amount of funds deposited by customers in 2020 stands at $400. and the reserve ratio increases to 8%. Will the money supply in the banking system increase, decrease or stay the same from 2019 levels? If it increases or decreases, calculate by how much it will change. If it stays the same, explain why. Show all steps involved in any calculations.

The best way to describe the relationship illustrated by the aggregate demand curve

if the AS curve shifts to the left as productivity decreases, it will result in a combination of?

Kofinatland is a hypothetical economy with the following economic indicators:
-Size of population:8million
-GDP at market price(-GDP at m.pm.)
-Subsidies: US $50 billion
-Interest paid by consumers:US $27billion
-Employees contribution to social insurance: US $200 billion
-Net factor income from abroad(NFYFA) :US $200 billion
-Capital Consumption allowance(CCA):US $80billion
-Human development index(HDI):0.91
-Indirect taxes on goods and services(ITGS):US $120billion
-Life expectancy rate:87years
-Government transfer payment: US $71.5 billion
-Factor income of foreigners in the economy(FYF): US $80 billion
-National Population growth rate: 0.5%

Determine the economy's
i. Net national product at market cost (NNP at m.px)
ii. Net national product at factor cost (NNP at f.c)
iii. Factor income of national abroad (FYN)
iv.GDP per capita ( note to use the -GDP at m.px. in your calculation)

7 So far, we have been assuming that the fiscal policy variable T is independent of the level of income (exogenous). In the real world, however, this is not the case. Taxes typically depend on the level of income, so tax revenue tends to be higher when income is higher. In this problem, we examine how this automatic response of taxes can help reduce the impact of changes in autonomous spending on output.
Consider the following model of the economy: C = C0 + c1Yd
T = t0 + t1Y Yd = Y - T
G and I are both constant (exogenous).
a. Is t1 (marginal propensity to tax) greater or less than one? Explain. b. Solve for equilibrium output. c. What is the multiplier? Does the economy respond more to changes in autonomous spending when t1 is zero or when t1 is positive? Demonstrate.

Suppose the IS curve is Y = 2500-125i and the LM is Y = 1000+25i. Use Cramer’s rule to determine i* and Y*. Now suppose increased spending by $100m. Determine the extent of crowding out of private investment and the increase in Ms required to dampen any crowding-out effect. You are given the following parameters: αG = 2.5, h = 65, k = 0.5, b = 50.

Use the following data to work Problems 1 to 3. The U.S. dollar exchange rate increased from $0.89 Canadian in June 2009 to $0.96 Canadian in June 2010, and it decreased from 83.8 euro cents in January 2009 to 76.9 euro cents in January 2010. Did the U.S. dollar appreciate or depreciate against the Canadian dollar? Did the U.S. dollar appreciate or depreciate against the euro? Explain