Y=C+I+G+X-IM
C=100+0.8Yd (consumption expenditure)
Yd=Y-T+TR (disposalble income)
IM=20+0.4Y (imports)
I=20 (level of investment)
G=30 (government expenditure)
TR=40 (transfer payments)
X=50 (exports)
t=0.2Y (marginal income tax rate)
Y= real GDP
C,I,G etc is being measured in millions $ and t is a ratio)
a. what is the equilibrium level of real GDP
b. what is the size of autonomous expenditure multiplier
This equation describes an economy where i is a percentage = i=5
C=100+0.9(1-t)Y
t=0.1
I=500-38i
G=1500
L=0.2Y-65i
MP = 600
a. The equilibrium level of income is
b. The equilibrium level of interest rate is?
b. When MP changes to 650 what is the quilibrium level of income and
interest rate? |
Request for Question Clarification by
rbnn-ga
on
27 Oct 2002 08:24 PST
Can you verify that in problem 1, the line:
t=0.2Y (marginal income tax rate)
should read
T=0.2 Y ?
|
Clarification of Question by
down-ga
on
27 Oct 2002 14:13 PST
Hi
it reads t=0.2Y
let me write it again
C = consumption expenditure, I = level of investment, G = government
expenditure, X = exports, IM = imports, Yd = disposable income, Y =
real GDP, T = tax revenue, TR = transfer payments, and t = marginal
income tax rate. C,I,G ... is measured in $mil and t is a ratio
thanks
|
Request for Question Clarification by
rbnn-ga
on
29 Oct 2002 03:03 PST
If t is a ratio, then it is not .2Y, since .2Y is not a ratio; also, T
is not defined anywhere numerically.
|
Clarification of Question by
down-ga
on
29 Oct 2002 12:35 PST
Hi
I have changed the question. Is it possible to solve question 1 if
the details are changed as follows or perhaps if I could get step by
step method (general equation) of solving a & b of question 1.
Y=C+I+G+X-IM
C=100+0.8Yd (consumption expenditure)
Yd=Y-T+TR (disposalble income)
IM=20+0.4Y (imports)
I=20 (level of investment)
G=30 (government expenditure)
TR=40 (transfer payments)
X=50 (exports)
t=0.2Y
Y= real GDP
thanks heaps
|
Request for Question Clarification by
rbnn-ga
on
30 Oct 2002 22:21 PST
Your new question seems to be the same as the old. I still don't see
where T is defined, and you haven't explained how if t=0.2Y then "t
can be a ratio". A ratio is dimensionless, t has units of millions of
dollars. Also in the next question, t is dimensionless.
|
Clarification of Question by
down-ga
on
30 Oct 2002 22:24 PST
is the first question not easy to solve? I am not sure how to solve
the equation. If the first question is difficult can i have the
second question solved - I really would like to learn how they are
solved.
thanks for the help
|
Clarification of Question by
down-ga
on
31 Oct 2002 05:27 PST
THis is how I am trying to solve ques 1(a) but still need help
100+(0.9)[1(0.1)]Y+500-38i+1400
2000+(0.9)[(1(0.1)]Y-38i
2000+(.81)Y-38i
.19Y=2000-38i
2000/.19 - (50/0.19)i
1053-200i
MP=0.2Y-65i => 0.2Y => M/P+65i => 0.2Y = 500 + 65i
Y = 500 / 0.2 + (65/0.2)i = 2500 + 325i
IS=>LM
1053-200i => 2500 + 325i
=1447 => 525 = 2.76i ....... am I on the right track?
thanks
|
Clarification of Question by
down-ga
on
31 Oct 2002 05:33 PST
answer to the question
I have gone through lot of books I could not find similar question. I
think the T and ratio is given for distraction. As for the part answer
posted previous I am sorry it is for ques 2(a). I must be very tired
since it is 12.34am and I have been studying from this morning.
thanks for your help
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