# Closed Economy Income-Expenditure Model Assignment | Homework For You

Consider a closed economy income-expenditure model of the economy where the country begins in a long-run equilibrium.

Don't use plagiarized sources. Get Your Assignment on
Closed Economy Income-Expenditure Model Assignment | Homework For You
Just from \$13/Page

•   Investment (I) and government spending (G) are fixed: I = 41.5, G = 26.

•   The income tax rate is t = 6.25%, so tax revenue equals T = tY .

•   The consumption function is C = 12 + 0.8Yd, where Yd = (1 − t)Y .

For the calculations below, write your answers as either a fraction or to two decimal places.

(a)   Write down the aggregate expenditure (AE) function using the above values. What is the value of the AE function’s intercept term? What is the value of the AE function’s slope term? What is equilibrium output?

(b)   Plot the aggregate expenditure function on a chart, with output (Y ) on the horizontal axis, in increments of 100 from 0 to 600.

(c)    In equilibrium, what is the level of consumption? What is the level of privatesaving?

(d)   What is the value of tax revenue, T? What is the value of government savings (T G)? Is the government running a surplus or deficit?

(e)   Suppose that the government reduces expenditure by 9.75 to 16.25. Suppose that this results in lower interest rates so that investment increases by 0.375 to 41.875. Following these changes, what is the new equilibrium level of output?

(f)     At the new level of equilibrium output, what is the new level of tax revenue? What is the new level of government savings? Is the surplus/deficit larger or smaller than it was in question (d)?

(g)   Simple income-expenditure models keep both the price level and interest rates fixed.In question (e), the interest rate was allowed to change. Discuss how allowing the price level to vary also would have changed output and tax revenue in equilibrium. Get Economics homework help today

Calculate the price
Pages (550 words)
\$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with Homework Writing Services
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
English 101
Customer 461063, November 1st, 2022
Military
Excellent
Customer 456821, November 12th, 2022
Professions and Applied Sciences
GOOD application.
Customer 462457, April 13th, 2022
Nursing
This revised version was far better than that of the first I received. Thank you so very much for the prompt service.
Customer 454007, March 16th, 2020
Great content! Few modification done
Customer 463245, December 15th, 2022
Always format your paper as instructed.
Customer 458115, April 7th, 2022
ASCI 491: Operational Application in Aeronautics
Good focus.
Customer 457731, April 3rd, 2022
Interior Decoration
Excellent work! We look down to your future contribution
Customer 463463, November 16th, 2022
Nursing
Thank you so much for the great paper!
Customer 454007, May 31st, 2020
Religious studies
Excellent content and structure.
Customer 462681, April 24th, 2022
Healthcare & Medical
Excellent work!
Customer 463337, November 18th, 2022
Military
Satisfactory work.
Customer 456821, April 14th, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend