Economics

Draw a consumption function and explain" rel="nofollow">in its in" rel="nofollow">intercept and slope. Show the impact of an in" rel="nofollow">increase in" rel="nofollow">in wealth on the consumption function, then show the correspondin" rel="nofollow">ing impact on aggregate supply, aggregate demand, equilibrium real GDP and the price level. Explain" rel="nofollow">in all of these impacts in" rel="nofollow">in words. 2. Describe and explain" rel="nofollow">in the slopes of the aggregate demand curve and the aggregate supply curve. Draw the curves and show what happens to production and prices in" rel="nofollow">in each of the followin" rel="nofollow">ing scenarios. Scenario 1: Technology improves productivity. Scenario 2: The government pursues a macroeconomic policy of fiscal restrain" rel="nofollow">int. Scenario 3: The fin" rel="nofollow">inancial system collapses and in" rel="nofollow">investors become very pessimistic. Then the government passes huge stimulus programs to get the economy goin" rel="nofollow">ing again" rel="nofollow">in. 3. Assume that C = 500 + 0.8YD where C is consumption and YD is disposable in" rel="nofollow">income. If YD = $1000B, what is the average propensity to consume, the average propensity to save, the margin" rel="nofollow">inal propensity to consume, the margin" rel="nofollow">inal propensity to save, the spendin" rel="nofollow">ing multiplier, the tax multiplier and the balanced budget multiplier? How much would the government need to in" rel="nofollow">increase spendin" rel="nofollow">ing to elimin" rel="nofollow">inate an aggregate demand shortfall of $1000B? How much would it need to cut taxes to achieve the same result? Explain" rel="nofollow">in why your two answers are different. 4. Distin" rel="nofollow">inguish between the federal budget deficit and the national debt. List and evaluate three common fears about the national debt. Explain" rel="nofollow">in the distin" rel="nofollow">inction between growth and austerity strategies to reduce the national debt. 5. Consider the followin" rel="nofollow">ing macroeconomic data from 2014 (in" rel="nofollow">in billions of current dollars): >Disposable in" rel="nofollow">income = $12,970 >Consumption = $11,866 >Planned in" rel="nofollow">investment = $2234 >Government outlays = $3506 >Government tax revenues $3021 >Exports = $2342 >Imports = $2872 (a) Savin" rel="nofollow">ings = (b) Fin" rel="nofollow">inancial sector leakage or in" rel="nofollow">injection (in" rel="nofollow">indicate which) = (c) Government sector leakage or in" rel="nofollow">injection (in" rel="nofollow">indicate which) = (d) Foreign sector leakage or in" rel="nofollow">injection (in" rel="nofollow">indicate which) = (e) Total leakages = (f) Total in" rel="nofollow">injections = (g) Would you predict that the US economy in" rel="nofollow">in 2015 will be larger or smaller than it was in" rel="nofollow">in 2014? Explain" rel="nofollow">in. 2. Describe and explain" rel="nofollow">in the slopes of the aggregate demand curve and the aggregate supply curve. Draw the curves and show what happens to production and prices in" rel="nofollow">in each of the followin" rel="nofollow">ing scenarios. Scenario 1: Technology improves productivity. Scenario 2: The government pursues a macroeconomic policy of fiscal restrain" rel="nofollow">int. Scenario 3: The fin" rel="nofollow">inancial system collapses and in" rel="nofollow">investors become very pessimistic. Then the government passes huge stimulus programs to get the economy goin" rel="nofollow">ing again" rel="nofollow">in. 3. Assume that C = 500 + 0.8YD where C is consumption and YD is disposable in" rel="nofollow">income. If YD = $1000B, what is the average propensity to consume, the average propensity to save, the margin" rel="nofollow">inal propensity to consume, the margin" rel="nofollow">inal propensity to save, the spendin" rel="nofollow">ing multiplier, the tax multiplier and the balanced budget multiplier? How much would the government need to in" rel="nofollow">increase spendin" rel="nofollow">ing to elimin" rel="nofollow">inate an aggregate demand shortfall of $1000B? How much would it need to cut taxes to achieve the same result? Explain" rel="nofollow">in why your two answers are different. 4. Distin" rel="nofollow">inguish between the federal budget deficit and the national debt. List and evaluate three common fears about the national debt. Explain" rel="nofollow">in the distin" rel="nofollow">inction between growth and austerity strategies to reduce the national debt. 5. Consider the followin" rel="nofollow">ing macroeconomic data from 2014 (in" rel="nofollow">in billions of current dollars): >Disposable in" rel="nofollow">income = $12,970 >Consumption = $11,866 >Planned in" rel="nofollow">investment = $2234 >Government outlays = $3506 >Government tax revenues $3021 >Exports = $2342 >Imports = $2872 (a) Savin" rel="nofollow">ings = (b) Fin" rel="nofollow">inancial sector leakage or in" rel="nofollow">injection (in" rel="nofollow">indicate which) = (c) Government sector leakage or in" rel="nofollow">injection (in" rel="nofollow">indicate which) = (d) Foreign sector leakage or in" rel="nofollow">injection (in" rel="nofollow">indicate which) = (e) Total leakages = (f) Total in" rel="nofollow">injections = (g) Would you predict that the US economy in" rel="nofollow">in 2015 will be larger or smaller than it was in" rel="nofollow">in 2014? Explain" rel="nofollow">in.