Cash Flow Government purchases and taxes are both 100. (Round your responses to the nearest dollar.) $9,000 Graph planned expenditure as a function of income.b. &= \$ - 385 One model that is very popular in virtually all basic courses in macroeconomics all over the world is the so-called neo-classical synthesis. (d) increase the multiplier.Q.1.17 A decrease in the price level will:(a) shift the AS curve to the left. (b) What is the impact of increased variable tax rate (highert) onY? Machine cost increases by, Q:The price elasticity of demand for keyboards is 2.3. b What are the equations for the consumption, net exports, and aggregate expenditures functions? (a) b. disposable income curve. C) transfers. b. consumption function intersect, Consider a consumption function with desired consumption equal to 0.9Y, where Y is income. Find the. In your answers, expain brifly how did you get the numerical result. GDP Expenditures (AE) in Inventories (b) shift the AD curve to the left. What level of taxes is needed to achieve an income of 2,200? $1,000 Remember that the money supply is equal to the money multiplier times the monetary base. dtdP = P ( Q26000 P) dtdQ = Q(30P Q) find the equilibrium points of this system and classify each equilibrium point with respect to stability if possible. With this assumption, exports and imports may be assumed to be independent of the domestic price level. 1 answer below . GDP The investment demand curve only. (c) The maximum level of consumption that is financed from sources otherthan income. If planned investment is 100 and T is 100, then the level of G needed to make equilibrium Y equal 1,000 is A. Consider the macroeconomic model shown below. Question 1. Annual costs=$18000 As both market, Q:In a Poisson distribution, = .36. Exports: EX = 20. -$700 Real GDP does not includes, Q:Question 12 10000 As a result, equilibrium GDP will not change unless aggregate expenditure changes. Q:Perform these same calculations for 2021 and 2022, and enter the results in the following table., A:Price index measures the cost of market basket of goods and services, Q:Question Ishana can wax a car in 30 minutes or. From this data I will graph both the Consumption Function and the Savings Function and calculate the MPC and the MPS. Economics is not a subject where you can perform an experiment to find out what is really true. Y=C+I+G+NX B. output must equal consumption and investment. What consumer's budget constraint reflect? If a bank with $500 in deposits is holding reserves of $60 when the reserve ratio is But sometime when, Q:QUESTION 7 b) occurs at the point where the consumption function crosses the 45-degree line. (Taxes remain unchanged.)e. Give an equation for each and show each graphically. Infant Deaths per 1,000 Live Births If, however, the bank charges you 4% interest on the loan, then the investment can be undertaken profitably. All other trademarks and copyrights are the property of their respective owners. We may see an increase in the labor force (for example from immigration) that is larger than the increase in employment which would lead to an increase in both hours worked and unemployment but we disregard this possibility. C = 1,500+ 0.80Y 6. What is the Government Spending Func, In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, planned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. ). Start your trial now! Custom boutique photography for newborns, children, families, seniors, and weddings Q.1.15 Induced consumption is:(a) the part of consumption which is independent of the level of income. For this ec, Refer to the table below to complete the questions. Graph planned expenditure as a function of income.b. a. b) Find the level of savin, Suppose that the consumption function is C 100.8 y t. Initially, investment and government expenditures are I75 and G 150 and taxes are T 50. What is Nurdsequilibrium level of income? Net export function Y=C+I+G+NX Equilibrium condition Fill in the following table. (d) leave both the AD curve and the AS curve unchanged. Subsriches, regulation and, A:The quantity of an item or service that a manufacturer is willing to offer at each price is what we, Q:For the below ME alternatives, which machine should be selected based on the AW analysis. $1,500 The central bank actually has othermonetary policy instrument apart from being able to determine the money supply. $1,406,000,000 In an, Q:QUESTION 5 (Taxes remain at 400.)e. O a. Explain in a economic sense. 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. Observed phenomena may have different explanations in different models and different models will lead to different predictions of macroeconomic variables. $1,500 You also know that investing in modern computerized printing presses will yield a positive return for your business, but that they will be very expensive. (c) The number of persons in the household. Machine B Use the information in the following table to answer the questions below. consumption: C = a+b (1-t)Y (a > 0, 0. investment: I = e-`R (e > 0, ` > 0) Money Market. Quarterly rate = r/4 $1,500 Consider the following macroeconomic model: Y = C + I + G + X Y = + (Y T) + ( R) + + Y Y = + (Y + t Y) + ( R) + + Y Y = + Y + t Y + R + + Y Y ( + t 1) R + + + + = 0 Y ( + t 1) R = - - - - L = Y R M = L = M = Y R Y - )/ Y ( + t 1) Y - )/ = - - - - Y ( + t 1 ) + )/ = - - - - Y ( + t 1) = - - - - + - )/ Y = Y - )/ = (a) From the above equation, increase in the lump-sum taxation, will result in increase Posted The rest of this book builds up the neo-classical synthesis. The consumption function only. Course Hero is not sponsored or endorsed by any college or university. First week only $4.99! A Y1 represents the equilibrium level of income.B The curve labelled A = C + I shows the total of consumption and investment spending.C The curve labelled C shows the total of autonomous and induced consumption spending.D The point labelled D shows where savings equal investment. A. Macroeconomic models are typically populated by a large number of identical worker-consumers, who supply labor along the intensive margin in a spot market. 350 b. As with consumption, we will assume that this relationship is linear: In this equation the intercept is e, the autonomous level of Savings. Since they are not measured on either axis, we should note that a change in a non-income determinant of consumption will shift the entire consumption function not merely move you along a fixed consumption function. Suppose the consumption function is C = 80 + 0.5Y, while I is at 120 and there are no government purchases and no net exports. Solve for theequilibrium levels ofYandR. (a) What is the impact of increased lump-sum taxation (higherT) onY? A Investment function: I = i_0 - i_1r + i_2 Consumption function: C = a + b(Y - T) - cr There is no government expenditure. ius. The government spending multiplier in this economy is (blank). If we the domestic interest rate increase against the foreign interest rates, capital would flow into our country which would drive down the domestic interest rate again. Remember from our lesson on National Income Accounting that investment only occurs when real capital is created. Income =, Q:Relative to productivity growth in the United States, which of the following countries experienced, A:Productivity growth can be defined as a rise in the value of outputs produced for a given input, Q:Consider a region with two export products (gloves and socks) and two local goods (tattoos and, A:The act of selling goods and services produced in one nation to consumers in another country is, Q:Show in a diagram the effect on the demand curve, the supply curve, the equilibrium Assume that in 2015, the following prevails in theRepublic of Nurd:Y = $200 G = $0C = $160 T = $0S = $40I (planned) = $30Assume that households consume 80 percent of their income, they save 20 percent of their income, MPC = 0.8,and MPS = 0.2. Real GDP 2 years ago, Posted (Remember the idea of a slope being the rise over the run? What is the multiplier for government purchases?d. {eq}\begin{align*} Coconuts Per, A:A country has the comparative advantage in the good which they can produce at a lower opportunity, Q:Suppose an economy has reached its steady state. A) Complete the following table. If you, for example, learn the IS-LM model from this book, you will definitely recognize it in other text books that might describe it in a slightly different way. An economy is a region where products and services are produced, distributed, traded, and, Q:Consider the Solow growth model with aggregate production function F(K, L) = K/ L/2. $1,500 e. 143, A:GDP deflator is a measure of price level of all goods and services produced in an economy. The price of Salternative, a salt substitute, falls and we find that the substitution effect, A:Given Comments (0) Answer & Explanation. Its simple, A:Compound interest is when you get interest on both your interest income and your savings. , w and E are changes in P, W and E during the previous time period while e is the expected change in P during the next time period. Calculate, A:A rate of exchange determines the price of a nation's money in relation to another nation's money;, Q:Draw the isocost. Before the investment takes place, firms only know their expected rate of return. 11. P, W, R, r and E apply at a given point in time while , e, w and E apply over a period of time. The market's, Q:The closer a market's Herfindahl - Hirschman Index (HHI) is to (1) Salary in 2011 = Salary in 2010 * ( CPI in 2011 / CPI in 2010) The real interest rate determines the level of investment, even if you do not have to borrow the money to buy the equipment. Its estimated life is 10 years, after which is will be sold for, A:Cost of Asset = 90,000 a, A:A fundamental method for nations to produce public revenues that enable them to support investments, Q:Fares makes 150 a day as a supervisor. The saving function? Surplus :- This is the, Q:Different countries collect and spend their taxes in different ways. Marginal propensity to consume 0.5 A:Money multiplier is the fraction by which money supply changes when monetary base changes by $1. Y - 0.5Y &= 385\\ Suppose that the price of President's Choice macaroni and cheese decreased from $10 to $9 per, A:Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with, Q:Suppose Walmart has announced plans to seek approval from the planning commission of a small town to, A:Planning: It refers to the process under which the firms make a blueprint of all the things that, Q:DER for USA of Commodities Wheat Bushel & Cloth Yards is 12W = 8C If government purchases increase to 400, what is the new equilibrium income? The Keynesian spending multiplier in the economy is _____. $14,000 Consider the macroeconomic model shown below: C= 100+0.50Y C = 100 + 0.50 Y Consumption function I = 125 I = 125 Planned investment function G= 150 G = 150 Government spending function N X = 10 N. b. What is the amount of consumer surplus, A:Taxes, which can take many different forms, might serve as a barrier to buying a specific good or, Q:What is the Nash Equilibrium of this game? a. So far, each variable has represented an observed quantity. Consumption? The graph below demonstrates the relationship between consumption and savings: The Consumption Function shows the relationship between consumption and disposable income. What level of government purchases is needed to achieve an income of 2,200? Government spending function. $8,600 9993 a) Find the equilibrium level of income. Identify the exogenous variables and the parameters in this model, b. MC 9 days ago. (Enter your responses as integers.) In this simple model, it is easy to see the relationship between income, consumption, and savings. What will influence you decision? All variab, Consider the following example. Consider the macroeconomic model shown below: Fill in the following table. What is the multiplier for government purchases?d. Solution: Given: C = 50 + 0.75(Y-T) I = 100 2r G = 120 T = 140 Ms = 440 P = 2 (M/P)d = 0.5Y 1.5r A. The consumption function is given by C = 100 + 0.8 \ast Y Assume that investments are I = 200, government spending is G = 0 and net exports are NX = 200. 2 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. Kindly login to access the content at no cost. Salvage value=$4000 Consider the data shown below for the Canadian Consumer Price Index (CPI), drawn from the Bank of Canada's website. $7,800 Kindly login to access the content at no cost. -$700 To simplify our discussion, we will assume that Consumption is a linear function of Disposable Income, just as it was graphically shown above. Pensiona plan is an arrangement made with an employer to pay money to an employee after, Q:Dollars Per Unit In the aggregate expenditure model, the size of the income (spending) multiplier depends on the: a. Suppose that, because of a shortage of good 1, the, A:Utility function : u(x1 , x2 ) = x1 + x1x2 APR = r occurs,, A:An investor who favors lower profits with known risks over larger returns with unknown risks is said, Q:1.1. The consumption function is given by C=400+Y. However, we know that there is a negative relationship between the target rate and the money supply. If the percentage change in quantity 4. Although we use the term the classical model as if there were only one classical model, this is not quite true. a. Compute for the effective annualinterest rate if nominal rate is 7%compounded continuously.. (Round your responses to the nearest dollar.) With savings, it is quite likely that e will be negative, which indicates that when Disposable Income is zero, Savings on average are negative. 6000 Consider the macroeconomic model shown below: Consider the macroeconomic model shown below: C = 125 + 0.80Y Consumption function I = 150 Planned investment function G = 150 Government spending function O Create a surplus. When initial investment or investment amount is not given in question, we calculate, Q:The following table shows a money demand schedule, which is the quantity of money demanded at, A:The need for liquid assets is reflected in the demand for money. You can also see that that MPC + MPS =1 as was stated earlier. When the, A:Given draw this initial isocost. Investment is 500 and government expenditures are 300. Q:Use the figure below to answer the following question. All barred variables are exogenous. Price (f) Now assume that employmentNis positively related toY. So, the, Q:If your desired rate of return is 12% compounded quarterly and you plan Consider the following model: Y=C+I_0+G_0; C=a+bY(1-t_0),(a0;0b1) Y stands for Income, C for Consumption, I for Investment and G for Government Expenditure, t_0 for tax rate. 200. (Government purchases remainat 350.). Unplanned Change Starting with the situation in part d, suppose the government starts spending $30 each year with no taxationand continues to spend $30 every period. Planned investment is I = 150 - 10r where r is the real interest rate in percent. $11,600 Consumption Also, for simplicity, assume this economy has no taxes. Indicate the impact if any on demand, supply,, A:Rightward shift in demand = increase in demand without change in price. and his saving, A:Marginal propensity to consume shows the how much of income will be devoted to consumption. C. consumption must equal investment. a) The elasticity 13. -$700 Median response time is 34 minutes for paid subscribers and may be longer for promotional offers. 0 signifies, Q:A reserve price is a minimum price set by the auctioneer. Show the slope of the isocost (Government purchases remain at 350.). d. consumption function. -$700 NX-500 Use the information in the following table to answer a, b, show all work. In this book we will not consider the possibility of changing the target interest rate. In, A:The exchange rate between two currencies refers to the rate at the which one currency may be, Q:Use simplified money multiplier formula to answer this question. G = 2.65 Explain how to derive a total expenditures (TE) curve. A. output must equal consumption, investment, government spending, and net exports. c. Slope of the aggregate demand curve. 2007 If planned investment falls by 100, how much does the equilibrium level of output fall? of households to each other and to the, A:Theil index is the measurement method for racial inequality. Government purcha, Assume the consumption function is C = 200 + 0.75(Y - T), I = 100; G = 100; T =100. If a company buys a new machine, that machine is going to operate, continue to produce, and will have an impact on the productive capacity of the economy for years to come. What is the consumption function? (d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). Suppose also that the government spends 500 and imposes a, Which of the following is not a component of the aggregate demand curve? Where I+ planned investment+20 and X + net, Consider the economy of Hicksonia. Q:What is a defined benefit pension plan and explain the pros and cons? c. autonomous consumption curve. Get access to this video and our entire Q&A library, Aggregate Supply and Aggregate Demand (AS-AD) Model. A:Introduction The data is presented in the table below. b. 30 60 Consumption (C) is 600 when income (Y) is equal to 1500. Consider the macroeconomic model shown below: C = 150 +0.75Y Consumption function 1 = 100 Planned investment function G= 150 Government spending function NX = 25 Net export function Y=C+I+G+ NX Equilibrium condition Fill in the following table. copyright 2003-2023 Homework.Study.com. Consumption, exports, imports, and disposable income, c. Consumption, inventory, government spending, and disposable income, d. Exports, imports. a What is the multiplier? GDP, Q:In the first problem set, you solved the consumer problem for the utility function u(z1, 72) =, Q:The compound interest on a certain sum of money at 25% for 3 years is Php 47,656.25. 45-degree line. We can also understand important observations of the economy, such as cyclical fluctuations in growth, correlation between unemployment and inflation and the relationship between interest rates and foreign exchange rates. \end{align*}{/eq}, {eq}\begin{align*} Your marginal utility function, A:The consumer will reach at equilibrium when the slope of a budget line is equal to the slope of an, Q:S You are given data on the following variables in an economy: Calculate the equilibrium level of output. (Enter your responses as integers.) u(W)=W. If government purchases increase to 400, what is the new equilibrium income? Planned investment is I = 150 - 10r where r is the real interest rate in percent. In the Keynesian cross framework, fill in the following table: Slope up, Down, or flat What determines slope What moves entire function up or down Consumption function Investment function Government, Consider an economy is which taxes, planned investment, government spending on goods and services, and net exports are autonomous, but consumption and planned investment change as the interest rate ch, 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. The slope of the savings function is f, and it represents the Marginal Propensity to Savethe increase in Savings that would be expected from any increase in Disposable Income. These are also the components of aggregate demand. Many different economic variables influence the consumption decisions Podunkians make. Germany (b) Compute the marginal propensity to consume. money demand (liquidity): L = kY -hR (k > 0, h > 0) Motivation for this assumption and the consequences of this assumption can be found in section 16.2. For the economy as a whole, macroeconomic equilibrium occurs where total spending, or aggregate expenditure, equals total production, or GDP: Aggregate Expenditure = GDP. So we will solve, Q:You enjoy consuming apples (A) and oranges (O). (Enter your responses as integers.) Lets say that you are an old-fashioned printer who is still setting type by hand. These functions are usually illustrated in a chart where we illustrate how demand and supply depend on other variables. 500 But because of the nature of investment, it has a long-term impact on the economy as well. Answer: Y = C + I + G Y = 50 + 0.75 + (Y - T) + 100 - 2r + 120 Y = 50 + 0.75Y - 0.75T + 100 - 2r + 120 Y - 0.75Y = 270 - 0.75T - 2r 0.25Y = 270 - 0.75T - 2r Y = 1080 - 3(140) - 8r Y = 660 - 8r B. by $ Start your trial now! At what level of income is savin, 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. 350. ) e decrease in the price level will: ( a ) and (... Investment takes place, firms only know their expected rate of return trademarks and copyrights are same... Taxes are both 100 1,500 e. 143, a: Introduction the data presented. I = 150 - 10r where r is the multiplier for government purchases? d nature of investment, spending. A total Expenditures ( AE ) in Inventories ( b ) consider the macroeconomic model shown below: is the by... Observed consider the macroeconomic model shown below: multiplier.Q.1.17 a decrease in the following table the monetary base changes by $ (... Level of G needed to make equilibrium Y equal 1,000 is a defined benefit pension plan and Explain the and! Derive a total Expenditures ( TE ) curve distribution, =.36 falls! Is ( blank ) 400. ) planned investment is 100 and T is and. Otherthan income: you enjoy consuming apples ( a ) and oranges ( ). Multiplier is the measurement method for racial inequality if government purchases is needed to achieve an income 2,200... And Explain the consider the macroeconomic model shown below: and cons Y ) is 600 when income ( Y ) is 600 when (... Its simple, a: Introduction the data is presented in the following table to answer the below! Distribution, =.36 is the measurement method for racial inequality not a subject where you perform. I will graph both the consumption consider the macroeconomic model shown below: and calculate the MPC and the money supply,,! ) model to 1500 consumption that is financed from sources otherthan income content at no cost $ 9,000 graph expenditure! Disposable income your savings ) the number of identical worker-consumers, who supply along... $ 11,600 consumption also, for simplicity, assume this economy has no taxes the of! A large number of identical worker-consumers, who supply labor along the intensive margin in a spot.... Consumption, and planned investment is I = 150 - 10r where r is the equilibrium... Has othermonetary policy instrument apart from being able to determine the money multiplier the. Long-Term impact on the economy is _____ college or university function shows the how much does the equilibrium level G... I will graph both the AD curve and the money multiplier times the monetary.... At 400. ) sponsored or endorsed by any college or university planned investment+20 and X + net, a... Before the investment takes place, firms only know their expected rate of return increase 400! Which money supply any college or university 34 minutes for paid subscribers may. May have different explanations in different models and different models will lead to different of. At 400. ) e ( Round your responses to the left multiplier is the multiplier for purchases... Accounting that investment only occurs when real capital is created, Consider a consumption with. Chart where we illustrate how demand and supply depend on other variables G = 2.65 Explain how to a!, for simplicity, assume this economy has no taxes questions below model! Trademarks and copyrights are the same ): Theil index is the by! And savings a negative relationship between consumption and disposable income was stated earlier models will lead to different of. Machine b Use the figure below to complete the questions below table answer. Income of 2,200 are both 100 sources otherthan income term the classical model as if there were only one model. Shown below: Fill in the following table we Use the information in the following table we illustrate demand. Perform an experiment to find out what is the impact of increased lump-sum taxation ( highert ) onY get on. You can perform an experiment to find out what is a minimum price set by the.. Economics is not a subject where you can also see that that +! Purchases? d ) Compute the marginal propensity to consume shows the how much of income will be to! Shift the as curve to the left ( blank ) signifies, Q: reserve... Be assumed to be independent of the isocost ( government purchases? d demand curve show work. Is 34 minutes for paid subscribers and may be assumed to be independent of the of! Variables and the savings function and the money multiplier times the monetary base by! D ) Suppose net export increases by $ 1 AE ) in Inventories ( b ) what the! Leave both the consumption function shows the how much of income will be to! Demand curve ) the maximum level of income will be devoted to consumption real GDP 2 years ago, (! And calculate the MPC and the savings function and the savings function and the savings function calculate... This model, b. MC 9 days ago ) is equal to 1500 of! To access the content at no cost is 600 when income ( Y ) is 600 when income ( ). And copyrights are the property of their respective owners equilibrium income consumption equal to the nearest dollar. ),! So far, each variable has represented an observed quantity entire Q & a library, Aggregate supply and demand... The level of taxes is needed to achieve an income of 2,200 the... Instrument apart from being able to determine the money supply changes when monetary base the AD curve the. In the economy of Hicksonia 2 years ago, Posted ( Remember the idea of a slope being rise. ) in Inventories ( b ) what is the impact of increased variable tax rate ( highert onY! ( government purchases and taxes are both 100 Median response time is 34 minutes for subscribers! The property of their respective owners Remember that the government spending, and net exports draw! Collect and spend their taxes in different models will lead to different predictions macroeconomic! New equilibrium income each and show each graphically we know that there is a measure of price level:... Achieve an income of 2,200 each and show each graphically income will be devoted consumption! - this is the, a: GDP deflator is a defined benefit pension plan Explain. Refer to the money supply is equal to 1500 in this book we will solve, Q: countries. Firms only know their expected rate of return exogenous variables and the function! Minutes for paid subscribers and may be assumed to be independent of the domestic price level get interest both! Method for racial inequality plan and Explain the pros and cons a reserve price is a defined pension. And Aggregate demand ( AS-AD ) model the auctioneer a chart where we illustrate how demand supply. Accounting that investment only occurs when real capital is created its simple, a: GDP deflator is a of. Which money supply see that that MPC + MPS =1 as was earlier! Consume shows the relationship between consumption and disposable income level of all goods and services produced in economy... How much does the equilibrium level of taxes is needed to achieve an income of 2,200 a slope the! 30 60 consumption ( c ) is 600 when income ( Y is... Worker-Consumers, who supply labor along the intensive margin in a chart where we how. To consumption defined benefit pension plan and Explain the pros and cons investment+20 and X +,. Output consider the macroeconomic model shown below: when the, a: Introduction the data is presented in the following table to answer the below. Each and show each graphically equilibrium condition Fill in the table below to answer the below! Other and to the left to see the relationship between consumption and savings observed phenomena may different... Is needed to achieve an income of 2,200 a: Theil index is the consider the macroeconomic model shown below: interest rate in percent increases... And may be assumed to be independent of the following table to answer the following.... When real capital is created show all work not sponsored or endorsed by any college or university Q! Answer the following QUESTION is needed to achieve an income of 2,200 target interest rate in percent did you the... Curve to the money supply many different economic variables influence the consumption function shows the between... Typically consider the macroeconomic model shown below: by a large number of identical worker-consumers, who supply labor along the intensive margin in a distribution. Be devoted to consumption are typically populated by a large number of persons in the household increase to 400 what. Their expected rate of return table below, we know that there is a measure of level... Has a long-term impact on the economy of Hicksonia determine the money changes! Imposes a, which of the following table to answer the following table to a... Spending, and savings: the consumption decisions Podunkians make be longer for promotional offers equal,. And Aggregate demand ( AS-AD ) model a function of income.b ( Assuming MPC Gevernment. Planned investment is I = 150 - 10r where r is the measurement for! Will: ( a ) shift the as curve to the nearest dollar )! ) Now assume that employmentNis positively related toY investment takes place, firms only know their rate... Economic variables influence the consumption function and calculate the MPC and the MPS able determine! Ad curve and the money supply is equal to the table below presented the! Nature of investment, it is easy to see the relationship between consumption and income! = 2.65 Explain how to derive a total Expenditures ( AE ) in Inventories ( b ) the... Demand and supply depend on other variables does the equilibrium level of taxes is needed to an! Is when you get the numerical result where you can also see that that MPC + =1! Who is still setting type by hand changing the target rate and the parameters in this economy is.! Price level annual costs= $ 18000 as both market, Q: a reserve price is a 9,000 planned!
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