econAssignment 2

econAssignment 2 - complete crowding in means each dollar...

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Assignment 2 5. year 2-4 inflation rate in order is: 10%, 9.1%, -0.42% year 1-4 real wage in order is: 10.00, 10.91, 10.83, 11.09 11. Because farmers only pay a small of the rent at the beginning and pay the rest later, and the rent was set on a nominal term. so the greater inflation rate the lower real value of the rent; therefore the farmers favored inflationary government policies. 3. a) Crowding in means as the government's purchases decreased, it caused both planned investment spending and consumption spending to increase. Also means that an increase in a sector's spending is caused by a decease in an other sector's spending
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Unformatted text preview: complete crowding in means each dollar of government purchases decreased causes private sector spending to increase by a full dollar. Also means that a dollar-for-dollar increase in spending in a sector's spending is caused completely by a decrease in an other sector's spending. b) yes the statement is true. 7. a) b)Net taxes= Govenment purchases = 5 c) Planned Investment = (103-100) = 3 d) GDP= G+Ip+C= 5+3+50=58 Real GDP= GDP/interest rate = 58/1.06= 54.7 e) total savings= planned investment spending = 3 f) Total leakages= (S+T)=3+5=8 g) Total injections= (Ip+G)= 3+5=8...
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