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
Derive the conditions for steady state in the Solow model. What are its implications? In what respects is the golden rule different from the steady state?

Robert's New Way Vacuum Cleaner Company is a newly started small business that produces vacuum cleaners and belongs to a monopolistically competitive market. Its demand curve for t

The number of gallons of paint that Home Depot sells in a given day is normally distributed with a mean of 150 gallons and a standard deviation of 35 gallons (I realize that the di

Supply of labor, L S (W/P), depends positively on real wages in classical model. It isn't always clear which individuals are included in the labor supply. Labor supply may consist

Draw the supply and demand graph for pizza, then answer the questions below. SUPPLY OF AND DEMAND FOR PIZZA Quantity Supplied Price Quantity Demanded 300 $15.00 100 240 12.00 180 1

Determination of L in the cross model As firms will produce less than Y OPT , they require less labor than L OPT . We can determine exactly how much L they need in order to pro

A change in government purchases of goods and services results in a change in real GDP equal to $200 million. Assume the absence of taxes, international trade, and changes in the a

Which is better meausute of welfare?

Price 10,9,8,7,6,5,4,3,2,1 QD 0,1,2,3,4,5,6,7,8,9,10 TR? Ed?.

What is most likely to go wrong in the analysis of direct material and other direct costs and what could be done about it.