Homework 01
Lessons 01 and 02
100 points
This homework is composed of multiple choice, fill-in-the-blank and true/false questions. Select or enter your
responses for each question. There is no time limit.
It will be available for review starting the day after the assignment is due.
Attempt History
Attempt
Time
Score
LATEST
Attempt 1
3,446 minutes 93 out of 100
Correct answers will be available on Jan 22 at 11:59pm.
Score for this quiz: 93 out of 100
Submitted Jan 19 at 10:43pm
This attempt took 3,446 minutes.
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 decimal places. For
example, if your answer is .412, enter it into the fill-in-the-blank as .41, or if your answer is 1.415, enter it into the
fill-in-the-blank as 1.42. If there are no decimals in your answer, 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 commas or $ or % symbols.
Question 1
3 / 3 pts
Suppose the consumption function is: C = a
1
Y
d
+ a
2
WRE/S + a
3
CC Where all the a’s (the sensitivity parameters) are
greater than zero. Initial conditions: Let a
1
= 0.60, a
2
= 0.04, a
3
= 0.5, WRE/S = 18,000: CC = 90
Solve for C in
terms of Y
d
.
Select the correct equation.
C = 765 + .60 Y
d
C = 90 + .60 Y
d
C = 720 + .60 Y
d
C = 765 + .64 Y
d
None of these are correct
Question 2
3 / 3 pts
Use the equation you found in #1 and let Y
d
= 2000. C is equal to:
1
1965

Question 3
3 / 3 pts
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 Y
d
. Select the correct equation.
C = 765 + .64 Y
d
C = 720 + .65 Y
d
C = 930 + .60 Y
d
None of these are correct
C = 880 + .60 Y
d
Question 4
3 / 3 pts
Now suppose disposable income (Y
d
) falls due to a tax increase (Uncle Sam is trying to balance the budget) to 1800.
Solve for the level of consumption using the equation you found in question #3. Consumption (C) is equal to:
Question 5
3 / 3 pts
Now we will calculate the level of consumption that would have occurred if Uncle Sam did not raise taxes. In other
words, use the equation you found in question 3, but keep Y
d
at its original value of 2000. Consumption (C) is equal
to:
Question 6
3 / 3 pts
Look at the consumption values you calculated in #2 and #4. The percent change in consumption between those
values is: _________%
NOTE:
There is no graphing component to be collected for this homework. However, you should be comfortable
graphing the equations you found in #1 and #3. You should also be able to plot the points you found in #2, #4 and
#5.

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- Summer '17
- Economics, Macroeconomics, pts