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WorksheetsChapter 1. Linear models: applications
Total questions: 10
Worksheet time: 15mins
The demand and supply functions of a good are given by:
P = −3Qd + 375
P = 2Qs + 75
Determine the equilibrium price?
195
60
300
75
135
Consider the macroeconomic model:
G = 20 (government expenditure)
I = 90 (planned investment)
C = 0.8Y + 20 (consumption)
Y = C + G + I (equilibrium)
Work out the change in the value of national income Y when government expenditure reduce by 2 units?
-26
-20
8
-10
36
If the supply and demand functions are given by
P = aQs + b
P = cQd + d
what conditions must be imposed on the parameters, a, b, c and d for these equations to be economically meaningful and for the equilibrium to exist?
a > 0, b > 0, c < 0, d < 0, d < b
a < 0, b < 0, c > 0, d > 0, d < b
a < 0, b > 0, c > 0, d < 0, d < b
a > 0, b > 0, c < 0, d > 0, d > b
Describe what happens to a good when the price of a complementary good decreases?
The equilibrium price increases, the equilibrium quantity decreases and the demand curve shifts left.
The equilibrium price and quantity both decrease and the demand curve shifts left.
The equilibrium price and quantity both increase and the demand curve shifts right.
The equilibrium price decreases, the equilibrium quantity increases and the demand curve shifts left.
The equilibrium price increases, the equilibrium quantity decreases and the demand curve shifts right.
In a simple macroeconomic model, the value of national income Y may be found by solving the system:
G = 350 (government expenditure)
T = 50 (taxation)
I = 100 (planned investment)
C = 0.75Yd + 150 (consumption)
where disposable income Yd = Y − T.
Calculate the equilibrium level of national income?
(a)
The demand and supply functions for two interdependent commodities are given by:
QD1 = 120 − 2P1 + P2; QS1= −7 + 7P1
QD2= 168 + 3P1 − 7P2; QS2 = −3 + 20P2
These goods are complementary or substitutable?
complementary
substitutable
The demand and supply functions for two interdependent commodities are given by:
QD1 = 120 − 2P1 + P2; QS1= −7 + 7P1
QD2= 168 + 3P1 − 7P2; QS2 = −3 + 20P2
Determine the equilibrium price for good 2?
15
8
98
157
Determine the equilibrium income Y, given the following information about the commodity market:
C = 0.6Y + 60; I = −40r + 1300
where C and I denote consumption and planned investment, respectively, and the following information about the money market:
MS = 600; L1 = 0.2Y; L2 = −30r + 40
where MS, L1 and L2 denote money supply, transaction-precautionary demand for money and speculative demand for money, respectively.
(a)
Consider the macroeconomic model:
G = 40 (government expenditure)
I = 90 (planned investment)
C = 0.8Y + 20 (consumption)
Y = C + G + I (equilibrium)
Work out the change in the value of national income Y when government expenditure rises by 2 units?
-26
10
8
-10
36
Determine the interest r, given the following information about the commodity market:
C = 0.6Y + 60; I = −40r + 1300
where C and I denote consumption and planned investment, respectively, and the following information about the money market:
MS = 600; L1 = 0.2Y; L2 = −30r + 40
where MS, L1 and L2 denote money supply, transaction-precautionary demand for money and speculative demand for money, respectively.
(a)
