# ECON104 Homework 4.docx - Question 1 3 3 pts Part 1 AE...

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Question 1 3 / 3 pts Part 1: AE Problem (11 questions worth 3 points each for a total of 33 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. 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 = a 0 + a 1 (Y-T) + a 2 (WSM) + a 3 (WRE) + a 4 (CC) + a 5 (r) 1’) C = a 0 + a 1 (Y-200) + a 2 (10,000) + a 3 (15,000) + a 4 (120) + a 5 (3) 1’') C = a 0 + a 1 (Y-200) + a 2 (12,000) + a 3 (15,000) + a 4 (160) + a 5 (3) 2) I = b 0 + b 1 AS + b 2 CF + b 3 (r) 2’) I = b 0 + b 1 (140) + b 2 (1500) + b 3 (3) 2’) I = b 0 + b 1 (180) + b 2 (2000) + b 3 (3) 3) G = G 3’) G = 200 4) X-M = X-M 4’) X-M = -200 4’) X-M = -400 5) AE = C + I + G + X-M Where: a 0 = 50, a 1 = .80, a 2 = .05, a 3 = .10, a 4 = .5, a 5 = -400, b 0 = 100, b 1 = .5, b 2 = .2, b 3 = -50 Use 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: .
Question 2 3 / 3 pts
Question 3 3 / 3 pts Fill in the intercept and slope values to correctly complete the AE equation:
Question 4
3 / 3 pts
Question 5 3 / 3 pts The value of equilibrium consumption (C) = ___5030___ Question 6 3 / 3 pts We now incur shocks to the economy as provided above in the red font . Use these new conditions to get expressions for the Consumption function, Investment and the AE equation. Fill in the intercept and slope values to correctly complete the new consumption function: C = 870 + .80 Y Question 7 3 / 3 pts What is the new value of Investment: I = __440____? Question 8 3 / 3 pts Fill in the intercept and slope values to correctly complete the new AE equation: AE = 1110 + .80 Y Question 9 3 / 3 pts The new value of equilibrium output (Y) = __5550____ Incorrect Question 10 0 / 3 pts The new value of equilibrium consumption (C) = _______ 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.
Question 11 3 / 3 pts 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. 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.