Calculate the equilibrium levels of national income, Macroeconomics

Let a macroeconomic model be of the following form:

C = a + bYD                            a = 10

T = T0                                   b = 4/5

G = G0                                  G0 = 10

 I = I0                                   I0 = 10

 YD = Y - T0                                     T0 = 10                                      

(a) Calculate the equilibrium levels of national income (Y), consumption (C) and Savings (S).

(b) Graph the above model representing both equilibrium conditions by separate graphs. That is,Y = C + I + G, and Total withdrawals = Total injections by graphing C and C + I functions separately as well as the aggregate expenditure function, C + I + G on the same graph paper.  Similarly, graph the S function by itself and S + T0 on a separate graph paper.  Label all the slopes and intercepts.  Make sure to present schedules.

(c)  If "a" in the consumption function were to increase by 5, G were to increase by 10 T0 were to increase by 10, calculate the separate as well as the total net effect of these changes on Y.

Posted Date: 3/12/2013 5:24:28 AM | Location : United States







Related Discussions:- Calculate the equilibrium levels of national income, Assignment Help, Ask Question on Calculate the equilibrium levels of national income, Get Answer, Expert's Help, Calculate the equilibrium levels of national income Discussions

Write discussion on Calculate the equilibrium levels of national income
Your posts are moderated
Related Questions
Suppose we're modeling an economy using the Solow model. It begins in steady state. By what proportion does y? (the post-change steady-state per capita GDP) change in response to t

How much do you have to deposit today in order to allow 5 annual withdrawals, beginning at the end of year 8, with the first withdrawal of $1000 with subsequent withdrawals decreas

Show the market for cigarettes paying particular attention to the price elasticity of demand and supply. What would happen to the total expenditure on cigarettes if there was a tax

with the help of a graph, explain factors that may cause a shift in the balance of payments

How can achieve mutual gain from international trade?

Is it true that government revenues are increased because of lower tax rates? Ans) It is true to a point. The Laffer curve determines that revenues enhance as the tax rates rise


For this question you will use the dataset "march01.dat", which includes wages (column 1), age (column 2), a dummy variable indicating females (column 3), and years of education (c

Why might external economies of scale be of interest to developing countries?

The Budget Line: The Consumer Constraints The consumer would like to maximize his satisfaction by reaching the highest possible indifference curve. But in the process, he faces