ss03 - C=160 + 0.6(Y-100) 150 1000 Z=400 + 0.6Y Z=Y 45 o...

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

View Full Document Right Arrow Icon

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

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

Unformatted text preview: C=160 + 0.6(Y-100) 150 1000 Z=400 + 0.6Y Z=Y 45 o University of Toronto Macroeconomics, Theory and policy Masoud Anjomshoa Economics Department Solution set #3 Disclaimer: These solutions are just guidelines for you, and may NOT include a complete solution for the questions and problems in your homework, as you must present in your assignments and/or exams. In your solutions you must show your work, and demonstrate your line of thinking clearly. Please, always check my calculations for unintentional typos or miscalculations.--------------------------------------------------------------------------------------------------------------------------------- Chapter 3. Q1. a. True b. False. Transfers are not included in G. c. False. It is between zero and one. d. True e. False. Demand = Supply=Output, where demand includes private consumption, government spending, investment, and net export. f. False. Equilibrium output increases by the multiplier factor, 1/(1-c1).------------------------------------------------------------------------------------------------------------------------------- Chapter 3. Q2- a)- Z= C+ G + I Z =160 +0.6*(Y-100) +150 +150 Z=400 + 0.6 Y Equilibrium Condition: Z = Y Line Z = Y has a slope of 45 degree. Z=400 + 0.6 Y Z= Y Y = 400 + 0.6 Y Y=1000 (point Y* in the graph) (Equilibrium Output/Income/Demand/Expenditure) b)- Equilibrium Disposable Income: Yd = Y T Yd = 1000 100 = 900 c)- Equilibrium Consumption: C= 160 + 0.6 Yd = 160 + 0.6 * 900 C = 700-------------------------------------------------------------------------------------------------------------------------------...
View Full Document

Page1 / 3

ss03 - C=160 + 0.6(Y-100) 150 1000 Z=400 + 0.6Y Z=Y 45 o...

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