By Ray Alexander,2014-07-08 10:42
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    1 Here we investigate an economy without foreign trade. Suppose the consumption

    CYD;;1000.6I50function is given by , while investment is given by . In

    G250addition, the government purchase is given by , and tax revenue of the

    T100government equals to .

    YYD and disposable income in this case? a) What is the equilibrium level of income

    b) Calculate the amount of public saving and private saving in equilibrium.

    c) What is the value of multiplier?

    Y900d) If , for some reason, output is at the level of 900 (), what will the level of unplanned

    change in inventories?

    Ie) If rises to 100, what will ht effect be on the equilibrium income?

    CYD;;1000.8f) Now suppose the consumption behavior above changes so that , while the

    other variables remain the same as above. Is the new equilibrium level of income higher or

    lower than it was in problem 1a) ? Calculate the new equilibrium level to verify this.

    g) In the case of problem 1f), if investment increases to 100, does this change in investment

    Yspending have more or less of an effect on than it did in problem 1e)? Why?

a/ Y=C+I+G=100+0.6YD+50+250=400+0.6YD

    YD=PI-T+Tran Pay

    PI=NI-NAP-T-TSI+Tran Pay+Div



    YD= Y-T=Y-100 Y=YD+100

    作出y=0.6x+400y=x+100 的图象如下













    YYD其交点为!750,850,(即the equilibrium level of income and disposable income is


b/ S私人=Y-C-T=850-100-0.6*750-100=200

     S公共=T-G=100-250= - 150

    S= S私人+ S公共=I=50



d/计划外的存货变化=real GDPY-计划总支出!AE=900-C+I+G=50?

e/ Y=C+I+G=100+0.6Y-T+I+G

    Y=250+2.5I+2.5G-1.5T I上升(Y也上升


f/ Higher


    YD= Y-T=Y-100 Y=YD+100



2 Doing the exercise of Problem 4 on Page 777778 at the end of chapter 24 in our

    textbook Macroeconomics

    3 Draw a basic aggregate demand and aggregate supply graph (with LRAS constant) showing the economy in long-run equilibrium

    a) Now assume that the government reduces the income tax. Show the resulting short-run

    equilibrium on your diagram. Explain how the economy adjusts back to long-run equilibrium.



    b) Now assume that now there is an unexpected decrease in the price of gasoline. Show the

    effects in the short-run and in the long-run. Explain how the economy adjusts back to the

    long-run equilibrium. SUPPLY SHOCK

    4 Doing the exercise of Problem 18 on Page 780 at the end of chapter 24 in our textbook Macroeconomics

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