Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Business Economics Expert

Equilibrium income using multiplier model and graphical representation of short-run Aggregate Demand and Supply Model

Consider the following hypothetical economy.

This economy can be represented algebraically as:

Consumption: C = 100 + 0.75YD

Investment I = 200

Government Spending = 150

Net Taxes NT = 0.2Y

Exports X = 80

Imports M = 0.1Y

Disposable Income YD = Y-NT = Y - tY

Aggregate Expenditure AE = C+I+G+NX

Assume the general price level is constant.

a) Using the multiplier model, compute the value of equilibrium income (Y).

b) Now assume full-employment equilibrium output is 1000. Illustrate what type of output gap exists and elucidate how much is the output gap? Use an aggregate demand (AD) and short run aggregate supply (AS) model to show the output gap graphically?

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M921379

Have any Question? 


Related Questions in Business Economics

Many cities have experienced a substantial decrease in the

Many cities have experienced a substantial decrease in the amount of garbage being collected after they changed from levying a flat tax on each household to a system where the homeowner is charged a fee for each bag or c ...

Discussion arrays and listssourceforge sourceforgenet

Discussion: Arrays and Lists SourceForge (sourceforge.net), JavaForge (javaforge.com), and Google Code (code.google.com). Pick any one of the 3 sites and Find a program that (A) uses at least one loop and a list effectiv ...

You are suffering from insomnia so decide to watch late

You are suffering from insomnia so decide to watch late night TV. You see the movie Wall Street where actor Charlie Sheen plays the part of a rogue broker who steals confidential information about possible merger targets ...

Assignmentother retail businesses in the mall in which your

Assignment Other retail businesses in the mall in which your sports shoes shop is located have decided to open on Sundays from Noon to 6 P.M. You decide to follow suit but two of your employees refuse to work on Sunday s ...

Explain the impact of each the following on the equilibrium

Explain the impact of each the following on the equilibrium prices of bonds. (i)Inflationary expectations in the economy fall evoking a much stronger response from issuers of bonds than investors in bonds. (ii) All leadi ...

You are starting your own internet business you decide to

You are starting your own Internet business. You decide to form a company that will sell cookbooks online. Justcookbooks.com is scheduled to launch 6 months from today. You estimate that the annual cost of this business ...

A treasurer of a corporation is trying to choose between

A treasurer of a corporation is trying to choose between options and forward contracts to hedge the corporation’s foreign exchange risk. Discuss what options you would take if you were the treasurer. Discuss the advantag ...

Assignmentdevelop a 1050-word examination of the ethics and

Assignment Develop a 1,050-word examination of the ethics and social responsibility practices within Wal-Mart. Include the following in your examination: • Select a business decision made within the organization. • Ident ...

You have an opportunity to invest in a business venture it

You have an opportunity to invest in a business venture. It requires a $250,000 investment on January 1st. You will receive $70,000 in After-Tax Cash Flows per year on December 31st for 3 years. At the end of 3 years, th ...

Environmental sustainability is concerned with the

Environmental sustainability is concerned with the relationship of a company to its environment and its use of finite natural resources since corporations are the biggest users of Natural Resources managing and maintaini ...

  • 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

A cola-dispensing machine is set to dispense 9 ounces of

A cola-dispensing machine is set to dispense 9 ounces of cola per cup, with a standard deviation of 1.0 ounce. The manuf

What is marketingbullwhat is marketing think back to your

What is Marketing? • "What is marketing"? Think back to your impressions before you started this class versus how you

Question -your client david smith runs a small it

QUESTION - Your client, David Smith runs a small IT consulting business specialising in computer software and techno

Inspection of a random sample of 22 aircraft showed that 15

Inspection of a random sample of 22 aircraft showed that 15 needed repairs to fix a wiring problem that might compromise

Effective hrmquestionhow can an effective hrm system help

Effective HRM Question How can an effective HRM system help facilitate the achievement of an organization's strate