Use the following information to answer question 1 - 10. C = 3000 + 0.6Y | = 1500 G = 2500 X = 1200 IM = 0.2Y T = 10% %3D 1) The equilibrium GDP is A) 8200 B) 10000 C) 13666 D) 20500 2) The marginal propensity to consume is A) 0.7 B) 0.6 6 C) 0. 6 D) 0.4 3) The marginal response of consumption is A) 0.7 B) 0.66 C) 0.6 D) 0.4 4) Marginal propensity to import is A) 0.4 B) 0.3 C) 0.2 D) 0.1
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A: Given, C = 8 + 0.6Y, G = 9 I = 14 X = M = 0
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A: Formula: Marginal propensity to consume = 1-Marginal propensity to save
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A: The multiplier (K) can be calculated using the following formula.
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A: Multiplier = 1 / (1 - MPC) = 1 / (1 - 0.75) = 1/0.25 = 4
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- In macroeconomics, the marginal propensity to consume (MPC) is the proportion of extra income that is spent on consumption, and it is important for determining the effects of monetary and fiscal policy. In this exercise, you will estimate the MPC with the slope from regression analysis. 1. Your two variables are consumption and income. Which is the dependent variable and which is the independent variable? 2. You have the following data on consumption and income (in $10,000s). Income Consumption 7 9 11 5 8 2 9 12 7 2 7 2 8 9 Make a scatterplot and draw the line of best fit.Given the scatter diagram in Figure 8-1, what is the MPC (your best estimate)? a. 1 b. 2/3 c. 1/2 d. 1/3 I know the answer of this question answer is 2/3 but can you please give the explanation how 2/3 is the answer of the problemQ3. You are working as a researcher in an economic Institute, you want to study the relation between the Unit sales as a Dependent variable and the following independent variables (selling expenditure, advertising, competitive price) As shown in the following model Unit Sales + = b0+b1 Exp + + b2 Adv t b3 t+ compt + Ut After collecting your data, and estimating your linear regression over the data, you got the following regression equation comp t Unit Sales t = -10.5 - 0.51 Exp + + 0.09 Adv 3.05 b3 t + (2.45) (-1.5) t- value (4.2) (2.94) R² = 0.24 F- Value 0.33 ' 1- What is the economic meaning of the coefficient b0 (-10.5) 2- Describe the meaning of R² and its value, F - Value 3- What do you think about the Model as a whole, with F, R2 values....is it significant or not ....explain your answer
- Analysts say that the increase in gasoline prices comes a drop in SUV sales and trade-in values at dealerships.The U.S. Department of energy said that during the past week, U.S. gasoline topped $3 a gallon - the highest level since October 2008. According to Alec Gutierrez,lead analyst for vehicle evaluation at Kelley Blue Book, SUV sales have decreased about 1 percent since the last major gasoline price hike in spring 2008. He doesn't believe that SUV sales will decrease significantly unless prices reach $3.50 to $4 per gallon. if a gasoline price hike of 5 percent caused the SUV sales drop described, what is the cross-price elasticity of demand between gasoline and SUVs?following the estimation of the income elasticity of demand. During this analysis, utilize the logarithmic transformations of PCE (Personal Consumption Expenditures) and PDI (Personal Disposable Income). Could you please provide the calculated cointegrating coefficient and its interpretation? > A) The calculated cointegrating coefficient is -0.09, indicating that there is a lagged adjustment of PCE to DPI. Approximately 9 percent of the difference between long-term and short-term PCE is corrected within a quarter. > B) The calculated cointegrating coefficient is -0.069, indicating that there is a lagged adjustment of PCE to DPI. Approximately 6.9 percent of the difference between long-term and short-term PCE is corrected within a quarter. > C) The calculated cointegrating coefficient is -0.08, indicating that there is a lagged adjustment of PCE to DPI. Approximately 8 percent of the difference between long-term and short-term PCE is corrected within a quarter. > D)…== 2. Consider an IS/LM model of an economy with the following equations:C = 300+ 0.6Ydl 100 5iG 200TR = 200T 200T = 0.1YL = 0.4Y 30iM/P = 500(a) Using the above data, derive the equation for the IS schedule. (b) In this example, what is the equation for the LM schedule? (c) Using simultaneous equations calculate the equilibrium level of income and interestrates. Sketch the IS/LM equilibrium position. (d) What are the values of the monetary policy multipliers with respect to income andinterest rates? If the money supply is increased by 30, what are the new market clearing income and interest rate levels?
- TABLE 12.1 | Two Stage Least Squares Estimates of the Demand for Cigarettes Using Panel Data for 48 U.S. States Dependent variable: In(Qfte) – In(Qfte) cigarettes Regressor (1) (2) (3) In(Peisarettes) - In(Pçigarettes -0.94** -1.34** -1.20** i,1995 i,1985 (0.21) (0.23) (0.20) In(Inc;1995) – In(Inc;1985) 0.53 (0.34) 0.43 (0.30) 0.46 (0.31) Intercept -0.12 -0.02 -0.05 (0.07) (0.07) (0.06) Both sales tax and Instrumental variable(s) Sales tax Cigarette-specific tax cigarette-specific tax First-stage F-statistic 33.70 107.20 88.60 Overidentifying restrictions J-test and p-value 4.93 (0.026) These regressions were estimated using data for 48 U.S. states (48 observations on the 10-year differences). The data are described in Appendix 12.1. The J-test of overidentifying restrictions is described in Key Concept 12.6 (its p-value is given in parentheses), and the first-stage F-statistic is described in Key Concept 12.5. Individual coefficients are statistically significant at the *5%…Consider an economy that is characterized by the following equations: C= 400 + 0.5 Yd I = 700 - 4000i + 0.1y G= 200 T= 200 (M/P)d - = 0.75Y - 7500€ (MP)== 600 What is the equilibrium consumption (C)?Calculate business investment for the following data: Y = 55,000 C = 40,000 G= 5,000 NX= - 2000 A.) Investment is $9,800 B.) Investment is 12,000 C.) Investment is 3600 D.) Investment is 1,200
- Solve for the MPK, assuming that the MPL in the production of smartphones is 50 per smartphone per hour and the MRTS is ¼.What is the effect on MPE, if there is an increase in a) MPC b) MPS c) MPM d) MTRpart a b and c solved Suppose that a coffee producing firm estimated the following regression of thedemand for its brand of coffee:Qc = 1.5 − 3.0Pc + 0.8Y + 2.0Pb − 0.6PS +1.2 Awhere Qc = sales of coffee brand C, in dollarsper pound Pc = price of coffee brand C,in dollars per poundY = personal disposable income, in millions of dollars per yearPb = price of the competitive brand of coffee, in dollarsper pound Ps = price of sugar, in dollars per poundA = advertising expenditures for coffee brand C, in hundreds of thousands ofdollars per year.Suppose also that this year, Pc = $2, Y = $2.5, Pb = $1.80,Ps = $1 and A =$1.a. Interpret the results of the estimated demand.b. Compute point price elasticity of demand for the firm’s brand of coffeewith respect to its price.c. Compute the cross-price elasticity of demand for coffee with respect to theprice of competitive coffee brand b.d. At the current price level, would it be viable for the firm to increase the pricelevel of its brand of coffee?…