What is the Implied Marginal Propensity to Consume (MPC) - Economics Assignment Help

Assignment Task:

Task:

1. The following data represent an economy with only three goods: beer, pizza, and Big Macs. OUTPUT PRICES 2020 2021 2020 2021 BEER 8 12 $1.00 $1.50 PIZZA 6 7 $5.00 $5.00 BIG MAC 10 15 $2.00 $1.00 (A) Calculate nominal GDP for 2020 and 2021. (B) Calculate real GDP for 2021 using 2020 as a base year. (C) Calculate the percentage change in real GDP from 2020 to 2021. 2. Explain as fully as possible “what will happen to Korean economy if Japanese Central Bank decides to expand the QE.” Try to explain each sector (consumption, investment, international trade, and so on) separately.

3. Explain why policy lags could make stabilization policies counterproductive.

4. What is the political business cycle and how does it relate to whether the central bank should have discretion or use a rule?

5. Identify as many government policies as possible that discourage saving, and explain very carefully.

6. Explain two different types of inflation (demand-pull inflation vs. cost-push inflation) using proper diagrams. What are the sources of these respective inflations? And suppose you are a chairman of Council of Economic Advisors for the president of Korea. You are asked to set up the economic policies. Carefully show your solutions for each type of inflation and their expected impacts.

7. Why do people care about the quantity of real money they hold rather than the quantity of nominal money they hold? 8~9. Use the following information to solve two questions. C = 100 + 0.8Yd (Consumption), I = 200 –1,000i (Investment) L = Y – 10,000i (Money Demand) G = 550, T = 500, Ms = 900, Yd = Y – T

8. Find the equilibrium level of Y, I, C and interest rate (i).

9. Suppose the independent investment is decreased up to 90 from 200. (A) Find the new equilibrium level of Y, C and i. (B) How much does Bank of Korea change the money supply to get the initial level of GDP?

10. Given the diagram below. Use your calculator to solve this question.

(A) What is the implied Marginal Propensity to Consume (MPC)?

(B) What is the expenditure multiplier?

(C) What is the equilibrium level of output, Y*?

(D) If planned investment, Ip, were to exactly double, what would be the new equilibrium level of output, Y**?

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