Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Microeconomics Expert

Suppose the initial conditions of the economy are characterized by the following equations in black font. We then shock the economy as shown in the red font.

1) C = a0 + a1 (Y-T) + a2 (WSM) + a3 (WRE) + a4 (CC) + a5 (r)
1') C = a0 + a1 (Y-200) + a2 (10,000) + a3 (15,000) + a4 (120) + a5 (4)
1'') C = a0 + a1 (Y-200) + a2 (12,000) + a3 (15,000) + a4 (160) + a5 (4) (shock)
2) I = b0 + b1AS + b¬2CF + b3 (r)
2') I = b0 + b1 (140) + b2 (1500) + b3 (4)
2') I = b0 + b1 (180) + b2 (2000) + b3 (4) (shock)
3) G = G
3') G = 200
4) X-M = X-M
4') X-M = -200
4') X-M = -400 (shock)
5) AE = C + I + G + X-M

Where: a0 = 50, a1 = .60, a2 = .05, a3 = .10, a4 = .5, a5 = -400, b0 = 100, b1 = .5, b2 = .2, b3 = -50

a) Given the initial conditions, find expression for consumption function and provide a completely labeled diagram. Please show all work.

b) Given the initial conditions, find an expression for the aggregate expenditure curve (AE in terms of Y), solve for equilibrium output and provide a graph of this aggregate expenditure curve labeling this initial equilibrium as point A. Please add point A to your consumption function diagram, being sure to label this point completely. Please show all work.

c) We now incur shocks as provided in red font. Solve for a new expression of the consumption function and aggregate expenditure curve, solve for the new equilibrium output and add this new equilibrium point to both of your diagrams (label as point B). Please show all work.

d) Are your results consistent with the new economy? Why or why not? describe in detail.

Microeconomics, Economics

  • Category:- Microeconomics
  • Reference No.:- M946409

Have any Question? 


Related Questions in Microeconomics

Micro economics paperyou have been given the responsibility

Micro Economics Paper You have been given the responsibility of working with your organization's CEO to do a competitive market analysis of the potential success of one of their existing products. Select your organizatio ...

Assignment sustainability at top shelf shoesin this course

Assignment: Sustainability at Top Shelf Shoes In this course, you will work independently to analyze sustainability issues for a hypothetical organization. The assignments follow one another so that you can apply the met ...

Discussion questionplease read thoroughly and provide

Discussion Question Please read thoroughly and provide references • Manufactures of smartphones design products to be interactive with consumers. To remain competitive, designers are focused on getting a new product to m ...

Assignmentin this assignment you must break a norm this

Assignment In this assignment, you must break a norm. This breach must be done in a public forum. You will be writing an essay about your experiment, in which you must be sure to answer all of the questions listed in thi ...

Assignmentioverview provide an overview consisting of a

Assignment I. Overview: Provide an overview consisting of a brief description of the chosen company, your chosen product or service, and annual sales. II. Macroeconomic Variables For this section, you will utilize macroe ...

Need someone to help with the belowthe theory of market

Need someone to help with the below The theory of market economies emphasizes freedom of choice and limited government intervention. The classic argument for government intervention is market failure - the inability of t ...

Economic choice and economic decision makingconsider your

ECONOMIC CHOICE AND ECONOMIC DECISION MAKING Consider your last vehicle purchase and the decision making process you engaged in while deciding what vehicle to purchase or if a new vehicle was the right decision. While an ...

Assignment maximizing profits and minimizing lossesconsider

Assignment: Maximizing Profits and Minimizing Losses Consider a supplier of agricultural equipment who is deciding how much of two products should be produced by his firm. You determine what the two products are. Now cre ...

Mcdonalds and the hindu culturein many ways mcdonalds

McDonald's and the Hindu Culture In many ways, McDonald's Corporation has written the book on global expansion. Every day, on average, somewhere around the world 4.2 new McDonald's restaurants are opened. By 2003, the co ...

Question 1which of the following has not been identified as

Question 1 Which of the following has NOT been identified as a basic consumer right? Consumers have a right to safe products. Consumers have a right to collude. Consumers have a right to be informed about a product. Cons ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro