Questions from Macroeconomics

Q: Imagine an economy in which consumer expenditure is represented by the following

Imagine an economy in which consumer expenditure is represented by the following equation: C = 50 + 0.75DI Imagine also that investors want to spend $500 at every level of income (I = $500), net expor...

Q: Use both numerical and graphical methods to find the multiplier effect of

Use both numerical and graphical methods to find the multiplier effect of the following shift in the consumption function in an economy in which investment is always $220, government purchases are alw...

Q: Suppose a worker receives a wage of $20 per hour.

Suppose a worker receives a wage of $20 per hour. Compute the real wage (money wage deflated by the price index) corresponding to each of the following possible price levels: 85, 95, 100, 110, 120. Wh...

Q: Add the following aggregate supply-and-demand schedules to the

Add the following aggregate supply-and-demand schedules to the example in Test Yourself Question 1 of Chapter 9 to see how inflation affects the multiplier. a. Draw these schedules on a piece of graph...

Q: Use an aggregate supply-and-demand diagram to show that

Use an aggregate supply-and-demand diagram to show that multiplier effects are smaller when the aggregate supply curve is steeper. Which case gives rise to more inflation—the steep aggregate supply cu...

Q: Consider an economy similar to that in the preceding question in which

Consider an economy similar to that in the preceding question in which investment is also $200, government purchases are also $500, net exports are also $30, and the price level is also fixed. But tax...

Q: Return to the hypothetical economy in Test Yourself Question 1, and

Return to the hypothetical economy in Test Yourself Question 1, and now suppose that both taxes and government purchases are increased by $120. Find the new equilibrium under the assumption that consu...

Q: Suppose you are put in charge of fiscal policy for the economy

Suppose you are put in charge of fiscal policy for the economy described in Test Yourself Question 1. There is an inflationary gap, and you want to reduce income by $120. What specific actions can you...

Q: Now put yourself in charge of the economy in Test Yourself Question

Now put yourself in charge of the economy in Test Yourself Question 2, and suppose that full employment comes at a GDP of $1,840. How can you push income up to that level?

Q: For each of the transactions listed in Test Yourself Question 3,

For each of the transactions listed in Test Yourself Question 3, what will be the ultimate effect on the money supply if the required reserve ratio is one-eighth (12.5 percent)? Assume that the oversi...