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
Marginal Propensity to save  (MPS)  is the ratio of change in total saving to change in total disposable income. Symbolically,     MPS = ?S/?Y For example, total

Can democracy survive if a majority of the citizenry pays little or nothing in taxes while benefiting directly from a higher level of government spending? Why or why not?

Question 1: Consider a closed economy with no government sector in which consumption (C) is related to income (Y) by the equation: C = A + bY (a) What is the marginal pr

The law requires that the parties be competent to enter into a contract. Give an example of a party who lacks competence.

REVEALED PREFERENCE APPROACH The downward slope of the demand curve was justified on the basis of utility derived by the consumer. But specification of consumer tastes in form

In your own words, explain the following: a) affective aperture, b) array factor, c) Friis equation, d) Antenna H-plane and E-plane, e) radiation resistance

Marginal cost curves generally slope: a) downward because of decreasing opportunity cost b) upward because of decreasing opportunity cost c) downward because of increasing opp

briefly explain with keynesian consumption?

What is the total cost of producing output? The total cost of producing a specified quantity of output is the total of the fixed cost along with the variable cost of producing

Half the members of a fishing tribe catch four fish per day and half catch 10 fish per day. A group of 10 members could build a boat for another tribe in one day and receive a paym