Solve the model for the equilibrium income

Assignment Help Microeconomics
Reference no: EM13877565

Consider the following model of income determination: Y = C + I + G0 , C = C0 + bY D , I = I0 + iY T = tY
This model includes a new equation expressing investment as a function of income (induced investment) and an autonomous or exogenous component I0.

(a) Solve the model for the equilibrium income. What is the model multiplier?

(b) What restrictions on the model's parameters are needed in order for the model to have a meaningful multiplier?

Reference no: EM13877565

Questions Cloud

Write an equation relating y and r and graph it : Consider the following aggregate consumption and investment function for a closed economy: C = 15 + 0.70Y , I = 30 + 0.1Y - 7.5 rHere, investment is expressed as a function of income Y and interest rate r (expressed as percentage).
Two different ethical approaches : Two different ethical approaches about the issue of euthanasia.
Medieval culture : MEDIEVAL CULTURE, Write a five page essay paper. 12pt Font. Times new Roman. The paper is to cover Charlemagne, Regulated day in the monastery,Woman and the monastic life, Music and Monasticism, Rise of drama, Charlemagne's death/Legend
Record income taxes on may net income : For each of the transactions prepare journal entries, using the date of the transaction as the reference. Calculate NGS's preliminary net income and net profit margin for the month. Which of the following best describes the adjustment(s) that will ha..
Solve the model for the equilibrium income : Consider the following model of income determination: Y = C + I + G0 , C = C0 + bY D , I = I0 + iY T = tY - Solve the model for the equilibrium income. What is the model multiplier.
Consider manufacturing processes observed in itrs plant : Consider the manufacturing processes observed in ITR's Ontario plant. What recommendations do you think Bryan and Kristen should make?
Create 3nf table designs for the system : Identify the entities and their relationships. Then create an ERD for the reservations system. Create 3NF table designs for the system
Is the budget in this economy balanced : Consider an open economy with the following consumption and tax functions: C = 5 + 0.75YD , T = 0.20Y Assume I0 = 100; G0 = 110; X0 = 90 and M0 = 105 - Find the equilibrium output.
Determine qcis preliminary net income : Quick Cleaners, Inc. (QCI) has been in business for several years. It specializes in cleaning houses but has some small business clients as well. Prepare journal entries for the following transactions, which occurred during a recent month, and determ..

Reviews

Write a Review

Microeconomics Questions & Answers

  Explain why is the students pick up the tickets

Every summer, tickets are sold for a high demand event, tickets are distributed on a first-come-first-served basis at 1pm on the day of the show, but people begin lining up before dawn. Most of the people in the lines appear to be students.

  How might advertising with no apparent informational content

Does a monopolistic competitor produce too much or too little output compared to the most efficient level? What practical considerations make it difficult for policymakers to solve this problem?

  Given an inverse demand function p

Given an inverse demand function: P = a - bQ; where a = 100, b = 1, and the short-run cost function is C(Q) = eQ + f, where e = 10 and f = 9, if all firms are economically identical:

  Price elasticities of demand and supply

Total revenue is calculated as the quantity of a good or service sold multiplied by its market price. Thus, it is a measure of how much money a company makes from selling its product. The core objective of a firm is maximizing profit. One of the ways..

  Considering lowering price of its min vans to promote sales

A car dealership is considering lowering the price of its min vans to promote sales. However, it worries that this will reduce sales of it station wagon autos. It finds the cross product of demand to be 1.5. Are its concerns legitimate? Explain.

  Along a downward-sloping linear demand curve

If the elasticity of demand for hamburgers equals _1.5 and the quantity demanded equals 40,000, predict what will happen to the quantity demanded of hamburgers when the price increases by 10 percent. If the price falls by 5   percent, what will happe..

  If the inverse demand curve is p120-qand the marginal cost

if the inverse demand curve is p120-qand the marginal cost is constant at 10how does charging the monopoly a specific

  They had received an equivalent amount of cash assistance

There are many "in-kind" versus cash payments made by the government to citizens such as food stamps, medical care, and public housing.

  Increase production of civilian goods without decreasing

suppose the united states produces two goods civilian goods and government goods and that is all that they produce. ok

  Derive a frequency distribution of income

Suppose Eastasia's government now reports that its population mean disposable household income is $900 per month, with a standard deviation of $100.  Oceana's population mean is $1000, with a standard deviation of $300.

  What is the unemployment rate

During the business cycle, the period between the point at which output reaches a high and the point at which it reaches a low is called

  Why would firms in such an industry have little incentive

If all the assumptions of perfect competition hold, why would firms in such an industry have little incentive to carry out technological change or much research and development What condition would encourage research and development in competitive..

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