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Analysis (any type)
02/10/2021
Question 6. 6. Given the basic Keynesian model-as a starting point: Y = C + I + G C = a + b Yd I = f (i) I ? f (Y) ie., MPI* = 0 G = Go Tx = Txo * MPI to represent marginal propensity of invest (NOT import) Assume that the current income level in the economy is $600 billion. To reduce the unemployment rate to the desired level, it is determined that we must raise the income level to $650 billion. Assume that C = 25 + 0.75 Yd . To accomplish this, taxes will have to be cut by how much? (Points : 3)
A. $50 billio
B. $40 billion
C. $16.7 billion
D. $12.5 billion
E. $150 billion
7. Given the basic Keynesian model-as a starting point: Y = C + I + G C = a + b Yd I = f (i) I ? f (Y) ie., MPI* = 0 G = Go Tx = Txo * MPI to represent marginal propensity of invest (NOT import) And if we write a tax function so that TX = To + t Y, where t is the tax rate, then the effect on the multipliers would be to:
A. increase the value (in absolute value, ignore signs)
B. decrease the value
C. have no effect on the value
8. Given the basic Keynesian model-as a starting point: Y = C + I + G C = a + b Yd I = f (i) I ? f (Y) ie., MPI* = 0 G = Go Tx = Txo * MPI to represent marginal propensity of invest (NOT import) Assume C = 20 + .8Yd, a $10 billion tax cut would shift the consumption function upward by:
A. $10 billion
B. more than $10 billion
C. less than $10 billion
D. cannot be determined
9. Given the model Y = C + I + G + X – M C = a + bYd where Yd= Y -Tx I = f ( i …), MPI = 0 G, Tx, X, Ms are all exogenous variables M = Mo + mY (import function) Md = Mt + Ml (money demand) Mt = f ( Y…) Ml = f ( i…) Now assume there is an increase in government spending. This will result in:
A. a rightward shift of the LM curve
B. an increase in consumption spending
C. no change in aggregate income
D. an increase in the level of exports
10. Assume a four spending sector model where the following variables are exogenously determined: Ms, Tx, G, X; assume also that investment spending and the asset/liquidity preference demand for money are both inversely related to interest rates; that consumption is positively related to disposable income and imports are also positively related to the level of domestic income. Now assume that the Federal Reserve goes on a major bond buying binge (in normal times and under normal conditions). This would result in:
A. a rightward shift of the IS curve
B. a leftward shift of the IS curve
C. a rightward shift (or rotation) of the LM curve
D. a leftward shift (or rotation) of the LM curve
Question 6. 6. Given the basic Keynesian model-as a starting point:Y=C+I+GC = a + b YdI = f (i) I ? f (Y) ie., MPI* = 0G = GoTx = Txo* MPI to represent marginal propensity of invest (NOT…
Really great job. Thank you so much. I really love it. Thank you so much for all of your help.
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