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Ch 12 Problem Set (ECON E-202; Introduction to Macroeconomics; Wenyi Shen)

Ch 12 Problem Set (ECON E-202; Introduction to Macroeconomics; Wenyi Shen)

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Unformatted text preview: Chapter 12 Problem Set Use the following information for all three-practice problems. GDP= Gross Domestic Product, T = taxes, D1 = Disposable Income, C = Consumption, S = Savings, I = Gross Private Domestic Investment, G = Government Spending, X = Net Exports 1. Table GDPTDICSIGX 500 100 400 420 -20 20 50 50 700 100 600 580 20 20 5C} 50 900 100 800 740 50 20 50 50 Questions Find the Consumption functiori, savings function, MPC &. MPS Find APC, APS, when DI = 500 Find equilibrium Find the autonomous spending multiplier What is the new equilibrium when 1 increases by 50 9:59.”? 2. Equations C = 0.9Dl +200 I= 100 G = 250 X= -50 T = 100 Questions 6. Find the Consumption function, savings function, MPC & MP8 7. Find APC, APS, when D] = 500 8. Find equilibrium 9. Find the autonomous spending multiplier 10. What IS the new equilibrium when I increases by 50 1 3. Graph C,I,G,X 45 Degree line 800 C+I+G+X 400 200 100 200 400 800 RGDP Questions 11. Find the Consumption function, savings function, MPC & MP3 12. Find APC, APS, when DI = 500 13. Find equilibrium 14. Find the autonomous Spending multiplier 15. What is the new equilibrium when I increases by 50 Chapter 12 Problem Set—Answer Use the following information for all three—practice problems. GDP: Gross Domestic Product, T = taxes, D1 = Disposable Income, C = Consumption, S = Savings, I = Gross Private Domestic Investment, G = Government Spending, X = Net Exports 1. Table GDP T DI C S I G X 500 100 400 420 -20 20 50 50 700 100 600 580 20 20 50 50 900 100 800 740 60 20 50 50 Questions Find the Consumption function, savings function, MPC & MPS Find APC, APS, when DI = 500 Find equilibrium Find the autonomous spending multiplier What is the new equilibrium when I increases by 50 .U‘PP’PE‘ Answers: C = 0.8DI +100, S = 0.2DI —100, MPC = 0.8, MPS = 0.2 APC = 500500 =1, APS = 01500 = 0 GDP=C+I+G+X, GDP=700 Multiplier = 1! I-MPC, Ill-0.8 = 5 Change in GDP = multiplier * change in autonomous spending Change in GDP = 5 * 50 Change in GDP = 250 New equilibrium = 700 (old equilibrium #3) + 250 New equilibrium = 950 P‘PP’E‘J’.‘ 2. Equations C = 0.9DI +200 I= 100 G = 250 X = ~50 T = 100 Questions Find the Consumption function, savings function, MPC & MPS Find APC, APS, when D1 = 500 Find equilibrium Find the autonomous spending multiplier What is the new equilibrium when 1 increases by 50 S-“PPPE‘ Answers: 6. C = 0.9DI +200, S = 0.1DI —200, MPC = 0.9, MIPS = 0.1 7. APC = 650500, APS = -150;'500 8. GDP=C+I+G+X GDP = 0.91)] +200 + 100 + 250 -50 GDP = 0.9(GDP—T) +200 + 100 + 250 —50 GDP = 0.9(GDP-100) +200 + 100 + 250 —50 GDP - 0.9GDP = 0.9(-100) + 500 0.1GDP = 500 —90 GDP = 4100 9. Multiplier = Ill—MPG, III-0.9 = 10 10. Change in GDP = multiplier * change in autonomous spending Change in GDP = 10 * 50 Change in GDP = 500 New equilibrium = 4100 (old equilibrium #8) + 500 New equilibrium = 4600 3. Graph C,I,G,X 45 Degree line 800 200 400 800 RE DP Questions 1. Find the Consumption function, savings function, MPC & MP3 2. Find APC, APS, when D1 = 500 3. Find equilibrium 4. Find the autonomous spending multiplier 5 . What is the new equilibrium when 1 increases by 50 Answers: 11. C = 0.5DI +100, S = 0.5DI —100, NIPC = 0.5, MP8 = 0.5 12. AFC = 350500, APS = 150500 GDP = C + I + G + X 13. GDP = 800 14. Multiplier = III-MPG, 1f 1-0.5 = 2 15. Change in GDP = multiplier * change in autonomous spending Change in GDP = 2 * 50 Change in GDP = 100 New equilibrium = 800 (old equilibrium #13) + 100 New equilibrium = 900 ...
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