# Homework_1 - Points Awarded 95.00 Points Missed 5.00...

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PointsAwarded95.00Points Missed5.00Percentage95.0%1.Part 1: 20 questions worth 3 points each for a total of 60 points.FOR FILL-IN-THE-BLANK questions:If your answer is in decimal form, round to 2 decimalplaces. For example, if your answer is .412, enter it into the fill-in-the-blank as .41, or if youranswer is 1.415, enter it into the fill-in-the-blank as 1.42. If there are no decimals in youranswer, you will simply enter the number; so if your answer is 2, enter 2 with no decimals.Do not enter any extra spaces, do not enter \$ or % symbols.Suppose the consumption function is: C = a1Yd+ a2WRE/S + a3CC Where all the a’s (thesensitivity parameters) are greater than zero. Initial conditions: Let a1= 0.60, a2= 0.04, a3=.5, WRE/S = 18,000: CC = 90Solve for C in terms of Yd.Select the correct equationbelow.A) C = 720 + .60 YdB) C = 765 + .60 YdC) C = 765 + .64 YdD) C = 90 + .60 YdE) None of the above are correct
Points Earned:3.0/3.0CorrectAnswer(s):B2.Use the equation you found in #1 and let Yd= 2000. C is equal to.1965
3.Suppose that the stock market rallies so that WRE/S increases to 22,000. Additionally,consumer confidence (CC) rises to 100. Re-solve for C in terms of Yd. Select the correctequation below.
4.Now suppose disposable income (Yd) falls due to a tax increase (Uncle Sam is trying tobalance the budget) to 1800. Solve for the level of consumption using the equation youfound in #3. Consumption (C) is equal to.
5.
Now we will calculate the level of consumption that would have occurred if Uncle Sam didnot raise taxes. In other words, use the equation you found in question 3, but keep Ydat itsoriginal value of 2000. Consumption (C) is equal to.Points Earned:3.0/3.0CorrectAnswer(s):21306.Look at the consumption values you calculated in #2 and #4. The percent change inconsumption between those values is2.29%NOTE:There is no graphing component to be collected for this homework. However, youshould be comfortable graphing the equations you found in #1 and #3. You should also beable to plot the points you found in #2, #4 and #5.Feedback:NOTE:There is no graphing component to be collected for this homework. However, youshould be comfortable graphing the equations you found in #1 and #3. You should also beable to plot the points you found in #2, #4 and #5.2130
Points Earned:3.0/3.0

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