Consider a macro model that has both a consumption function that depends on lagged income (Like Freidman's permanent income equation) and an investment equation that depends with a lag, on changes in income. Ignore interest - rate effects. In particular assume that the following equations describe the economy
Y= C+I+G
C= 220+ 0.63Yp with Yp =0.5(Y+ Y-1 )
I= 900 + 0.2(Y-1 - Y-2)
G= 1200
A. By algebraic substitution of Can I into the income identity, obtain a single expression for both output Y in terms of output in the previous years (Y-1 and Y-2)
B. Calculate the constant level of output Y that satisfies all the relationships in the model (Hint set Y -1 =Y and Y -2 =Y in the equation from part a and solve for Y using algebra
C. Suppose that y is = to the value you calculated in part b for the past 2 years (Years 1 and 2) Now suppose that government spending increases by $50 billion in year 3 calculate the effect on output in year 3 . Calculate the effect on output in years 4 through 10 . Be sure to use the relationship you derived in part a and substitute the values for Y -1 and Y -2 you calculated in the previous two steps.
D. Plot the values of Y on a diagram with the years on the horizontal axis. Do you notice any cyclical behavior in Y. Explain what is going on ( this model was originally developed by Paul Samuelsson of M.I.T) while a student at Harvard in the 1930's

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This solution answers questions about multiplier accelerator interaction.

Your company is designing a desk-top sized proton accelerator, using a 500MN/C superconducting magnet to hold the protons in a circular path. Estimate the maximum kinetic energy that your accelerator can give protons. Express your answer in the conventional particle physics unit of electron-volts, where 1 eV=1.6*10^-19J. For

Please help. I need detailed information on the following:
If taxes are lowered how will it affect the multiplier, AD, GDP, prices and tax revenue?
Also, how are taxes incorporated into the multiplier? (I am not sure what the word "incorporated" is referring to and cannot seem to get a straight answer.)
I have already

Q8.1 Demand Side Equilibrium & Multiplier
Consider an economy with the following characteristics (in $ billion):
C = 60 + 0.8Yd (where Yd = disposable income)
t = 0.2
I = 40
G = 30

Please see the attached file.
1. If the government spending multiplier is 6, what is the tax multiplier?
2. You are given this account for a bank:
ASSETS LIABILITIES
RESERVES $ 500 $ 3,500 DEPOSITS
LOA

A leading broker has advertised money multiplier certificates that will triple your money in nine years; that is, if you buy one for $333.33 today, it will pay you $1,000 at the end of nine years.
What rate of return will you earn on these money multiplier certificates?

Discuss answers to the following questions:
Consider an economy in which: C=100+0.5Y and I=100 - output is equal to income
a) Find equilibrium income.
b) What is the multiplier for consumption spending for this economy?
c) What is the multiplier for investment spending for this economy?
d) What is the marginal pro

PROBLEM 7-9. Dropping a Product Line
Pantheon Gaming, a computer enhancement company, has three product lines: audio enhancers, video enhancers, and connection-speed accelerators. Common costs are allocated based on relative sales. A product line income statement
follows:
Pantheon Gaming
Income Statement
For the Year En