96%(28)27 out of 28 people found this document helpful
This preview shows page 1 - 5 out of 21 pages.
Points Awarded96.00Points Missed4.00Percentage96.0%1.Part 1: AE Problem (11 questions worth 3 points each for a total of 33 points). 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)2) I = b0+ b1AS + b2CF + b3(r) 2’) I = b0+ b1(140) + b2(1500) + b3(4)2’) I = b0+ b1(180) + b2(2000) + b3(4)3) G = G3’) G = 2004) X-M = X-M4’) X-M = -2004’) X-M = -4005) AE = C + I + G + X-MWhere: a0= 50, a1= .60, a2= .05, a3= .10, a4= .5, a5= -400, b0= 100, b1= .5, b2= .2, b3= -50Use the initial conditions above to get expressions for the Consumption function, Investment and the AE equation.Fill in the intercept and slope values to correctly complete the consumption function:C = + YTable for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):Box 1: 390;Box 2: .6, 0.6, 0.60, .602.What is the value of Investment: I = 390.60270
Table for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):2703.Fill in the intercept and slope values to correctly complete the AE equation: AE = + YTable for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):Box 1: 660;Box 2: .6, .60, 0.6, 0.604.The value of equilibrium output (Y) = Table for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):16505.The value of equilibrium consumption (C) = Table for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):13806.We now incur shocks to the economy as provided in the red font. Use these new conditions to get expressions for the Consumption function, Investment and the AE equation.660.6016501380
Fill in the intercept and slope values to correctly complete the new consumption function: C = + YTable for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):Box 1: 510;Box 2: .6, .60, 0.6, 0.607.What is the newvalue of Investment: I = Table for Individual Question FeedbackPoints Earned:0.0/3.0Correct Answer(s):3908.Fill in the intercept and slope values to correctly complete the newAE equation: AE = + YTable for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):Box 1: 700;Box 2: .6, .60, 0.6, 0.609.The newvalue of equilibrium output (Y) = Table for Individual Question FeedbackPoints Earned:3.0/3.0Correct Answer(s):1750510.60190700.601750
10.The newvalue of equilibrium consumption (C) = Feedback:NOTE:There is no graphing component to be collected for this homework. However, you should be comfortable creating two separate graphs from the above questions in part 1. You should be able to:1.Graph the consumption function both before and after the shock on one graph, and also plot equilibrium consumption and output values both before and after the shock.2.Graph the AE equation both before and after the shock on one graph, and also plot equilibrium output Y both before and after the shock.