### New equilibrium level of income be greater

##### Reference no: EM13974673

Two identical countries, Country A and Country B, can each be described by a Keynesian-cross model. The MPC is 0.9 in each country. Country A decides to increase spending by \$2 billion, while Country B decides to cut taxes by \$2 billion. Find the tax and government multiplier for both countries. In which country will the new equilibrium level of income be greater?

##### Reference no: EM13974673

Tipping theory, though not new, is in the news lately, in reference to our "recession" (some say "depression"), and how we can get ourselves out of it, whatever we call it. Wh

#### Production function-what is the total cost to produce

An agricultural firm has a production function (products of the whole year) given by q = 500 SQRT(SF). q is output of agricultural products in pounds. S is land area in square

#### Marginal rate of substitution between books and coffee

Suppose that there are only two goods, books and coffee. Wally gets utility from both books and coffee, but his indifference curves between them are concave rather than convex

#### The equilibrium quantity of loanable funds exchanged

Suppose the government of Country L runs a balanced budget in Year 1 and a budget surplus in Year 2. Using a supply and demand graph, depict this change. Label the axes, curve

#### Whats the price elasticity of demand at the equilibrium

Demand curve is P=-Q+90 and the supply curve is P=0.5Q. Find equilibrium price and quantity. What’s the level of total expenditure in the market? What’s the price elasticity o

#### Calculate the level of production and sales

Calculate the level of production for which the two methods have the same total costs. Compare the profits of the two manufacturers for production and sales of 200,000 units.

#### Government imposes both sales tax and excise subsidy

Cigarettes currently sell for \$10 a pack. Suppose the government imposes both a \$4 sales tax and a \$7 excise subsidy on cigarettes. Use a graph to demonstrate that the new pri

#### What is the difference of the total interest paid

Arian is about to borrow \$2,000 from his uncle. He has an option to repay the loan at the end of year 4 with 5.43% simple interest per year or with 8.99% interest per year, co