How much will consumption change

Assignment Help Econometrics
Reference no: EM131136400

Suppose that 70 percent of a country's population, as a consequence of liquidity constraints, behaves in accordance with the traditional model of consumption and thus consumes, every period, a given fraction of its disposable income. The other 30 percent of the population behaves in accordance with the LC-PIH.

a. If the MPC in the traditional model is .8 and disposable income changes by $10 million (you may assume that this change is due entirely to a change in transitory income), by how much will consumption change?

b. What if 70 percent of the population behaves in accordance with the LC-PIH, and 30 percent behaves in accordance with the traditional model?

c. What if 100 percent of the population behaves in accordance with the LC-PIH?

Reference no: EM131136400

Questions Cloud

What is the corresponding desired capital stock : Suppose that the capital stock was at the desired level before the change in income was expected. Suppose further that .4 in the gradual adjustment model of investment. What will the rate of investment be in the first year after expected income ch..
Difference between equality protection and equality law : What is the difference between Equality protection clause and The Equality Law
How sql used to retrieve information from a spatial database : What does a spatial database store? How does it store it? How is SQL used to retrieve information from a spatial database? Explain what observer functions are and their role in a spatial database. Provide examples.
Assignment on research application : In this assignment, you will use the Internet and other sources to gather and interpret information related to service and manufacturing organizations.
How much will consumption change : If the MPC in the traditional model is .8 and disposable income changes by $10 million (you may assume that this change is due entirely to a change in transitory income), by how much will consumption change?
Provide your own definition of community-policing : Determine the top five (5) qualities that detectives and undercover officers need to possess (one [1] being the most important). Provide a rationale for your response.
Define popular sovereignty why is it an important concept : Explain the difference between equality of opportunity and equality of results. Define popular sovereignty? Why is it an important concept? How is the power of the majority checked in the Constitution
Opportunity cost of consuming a set of goods today : Can you make a prediction regarding the net effect of this increase in r on the rate of saving? Why, or why not?
Develop a high-level use case to represent the application : Develop a high-level use case to represent the application as a whole. Develop a functional decomposition diagram to show all of the functions that the system or application will support.

Reviews

Write a Review

Econometrics Questions & Answers

  How much will be sold and what will the price be

If the industry is regulated in a way that requires it to set P = AC, how much will be sold and what will the price be c) If the industry is regulated in a way that requires it to set P = MC, how much will be sold and what will the price be

  Explain using human capital theory why this is so rare

Going to Medical School at the Age of 50. While we might admire someone who decides to attend medical school at the age of 50, explain using human capital theory why this is so rare.

  What advantages do they have over other plants

What major polymers are present in the cell walls of the plants you described in (c)? What key research findings must be made in order to more efficiently produce low-cost energy from these polymers?

  Determine equilibrium output and selling price for each firm

Assume that two companies (C and D) are duopolists that produce identical products. Demand for the products is given by the following linear demand function: P=600-QC-QD QC and QD are the quantities sold by the respective firms and P is the sellin..

  Calculate the amount of the monthly deposit sarah must make

It is Sarah's 21st birthday today and she has received an inheritance of $50,000 from her grandfather. Sarah will spend one-half of this inheritance, and use the rest to start a retirement savings fund.

  Explain why the system x is judged to have high risk

HEALTHCARE MANAGED CARE COMPANY IS EVALUATING TWO DIFFERENT COMPUTER SYSTEMS FOR HANDLING PROVIDER CLAIMS. There are no incremental revenues attached to the projects, so the decision will be made on the basis of the present value of costs.

  What is amount of the economics profits at the output level

Suppose that the price of a service sold in a perfectly competitive market is $25 per unit. For a firm in this market, the output level corresponding to a marginal cost of $25 per unit is 2,000 units.

  Why current maintenance activity will require used system

An airport needs a modern material handling system for facilitating access to and from a busy maintenance hanger. A second-hand system will cost $75,000. A new system with improved technology can decrease labor hours by 20% compared to the used sy..

  Identification of the strengths and weaknesses of program

Provide a critical analysis of M&R's implementation of the balanced scorecard, including an identification of the strengths and weaknesses of the program.

  Describe a sluggish economy

"Though I'm against it for personal (Veteran) reasons. Majority of the drugs we found in Afghanistan were used to finance terrorist group.. although legalizing it would mean..less income for the terrorist and raise gdp So I'm not sure." 4. Give in..

  How to open a savings account to save for new house

You open a savings account to save for a new house. Everymonth you put $100 into a savings account which pays 5%  interest compounded monthly.

  What is the total annual equivalent expense for the furnace

A small company heats its building and spends $8,000 per year on natural gas for this purpose. Cost increases of natural gas are expected to be 10% per year starting one year from now (i.e., the first cash flow is $8,800 at EOY one).

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd