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Consider the following aggregate expenditure model of the Canadian economy operating with givenwages and other factor prices, price level, interest rates, exchange rates, and expectations: C = 50 + 0.8YD I = 400 G = 500 T = 0.3Y X = 650 IM = 0.36Y where C is consumption (the 0.8 term represents the marginal propensity to consume) YD is disposable income, I is investment, G is government spending on goods and services, T is the total value of taxes net of transfers (the 0.3 term represents the net tax rate on national income), X is exports, and IM is imports (the 0.36 term represents the marginal propensity to import). (a) Solve for aggregate expenditures (AE) as a function of Y, and calculate the equilibrium level of national income. Illustrate your equilibrium in a diagram with AE on the vertical and Y on the horizontal axis. What is the value of the multiplier? (b) Calculate the level of disposable income, consumption, private saving, government budget balance, and net exports at the equilibrium. Express the components of aggregate expenditure (C, I, G, and NX) as percentages of GDP (to one decimal place). (c) Suppose that (due to the decrease in world oil prices) Canadian exports decrease by 100 from 650 to 550. What is the new level of GDP? Illustrate in your diagram. What is the effect on the government's budget balance? What happens to net exports? Can you explain why the change in net exports less than the decrease in exports? (d) Now suppose that the government decides to use its spending power to restore national income to its original level. By how much must the government increase G to restore the original level of national income? What will happen to the government's budget balance? How do you explain the new level of the budget balance compared to that in part (c) and in part (b)?
Suppose Virginia withdrew $10,000 from her bank. If the reserve ratio is 2 percent theen this transaction willl lead to decreasing ____ in checking account balance.
Granny’s Restaurant sells apple pies. Granny knows that the demand curve for her pies does not shift over time, but she wants to learn more about that demand. She has tested the market for her pies by charging different prices
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Give a numerical example to show that monopolist's marginal revenue can be upward-sloping over part of its range. Hint: The price on the demand curve is the producer's average revenue.
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You should comment on the success and/or failure of its approach and implementation as stated in the text and posted readings and how it may have modified its organization, supply or marketing over time given changes in its markets
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assume there are 400 families in a community. each of these families spends exactly 100 plus one-half of its total
a manufacturer is considering purchasing equipment which will have the following financial effectsyearnbsp
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