optionalhomework6spring2007

optionalhomework6spring2007 - Economics 102 Homework #6...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 102 Homework #6 Spring 2007 Directions: The homework will NOT be collected. Although we do not that questions in this extra homework will be on the exam, we strongly encourage you to solve and understand all the questions here. Good luck! 1. Consider the following simple Keynesian model: Y = C + S + T C = 100 + 0.7(Y-T) I = 200 G = 240 T = 0 The aggregate production function of the economy is Y = 2*(L)^0.5. The functions of demand for and supply of labor are: Demand: (w/P) = 3000000-L Supply: (w/P) = 2L (a) Calculate the equilibrium output in this economy according to the Keynesian model. (b) What is the equilibrium level of employment in this Keynesian equilibrium? Is that different from the full employment level that is found by the intersection of the labor demand and supply functions? (c) Assume the government wants to move the economy to the full employment level of output by changing G. What does G have to equal to reach the full employment level of output? (d) Graphically represent your answers in parts (a) through (c).
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

This note was uploaded on 08/08/2008 for the course ECON 102 taught by Professor Drozd during the Spring '08 term at Wisconsin.

Page1 / 3

optionalhomework6spring2007 - Economics 102 Homework #6...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online