ECON 102 - Learning Tasks and Assessments

Lecture 3 : DETERMINATION OF NATIONAL INCOME: THE REAL GOODS MARKET .

Learning Tasks/Activities/ Assessment 3

1) Given the following data from a two-sector economy model : C = P40 + 0.75Yd I = P60.

Find:

a) What does 40 in the consumption function represent?

b) What does 0.75 in the consumption function mean?

c) What will be the equilibrium level of income, Yeq .

d) How much is consumption at Yeq

e) How much is savings at Yeq

f) Show what happens to Yeq if I is increased from 60 to P100.

2)explain the paradox of thrift.

Lecture 4 : GOVERNMENT IN THE MACROECONOMY .

Learning Tasks/Activities/Assessment 4

Consider an economy that is described by the following equations: C = P40 + 0.75Yd I = P60. G = 30 T = 30

Find:

a) the equilibrium level of income, Yeq

b) how much is consumption at Yeq

c) how much is savings at Yeq

Lecture 5 : FISCAL POLICY, INFLATIONARY AND DEFLATIONARY GAPS

Learning Tasks/Activities/ Assessment 5

Consider the 3-sector economy model where:

C = 80 + 0.50Yd

I = 100

G = 50

T = 100

a. What is the equilibrium level of income Yeq?

b. If full employment level of income Yf is 400, how large is the gap? What type of gap exists?

c. Assume that the government can only alter G to eliminate the gap, should G be increased or decreased? By what amount?

d. If instead of changing G, the government decides to change the amount of lump sum tax as a method of eliminating the gap, should T be increased or decreased? By how much?

e. Suppose the government decides to use the balanced-budget policy, by how much should T and G increase or decrease to eliminate the gap?

Lecture 6 : EQUILIBRIUM IN THE COMMODITY/GOODS MARKET

Learning Tasks/Activities/Assessment 6

Given the following data in a three-sector economy:

C = 60 + 0.80Yd;

I = 300 - 600r;

G = 50;

T = 75

a) Find the IS equation

b) Find the equilibrium level of income when the rates of interest is 12%.

c) Find the equilibrium level of income when the rate of is 15%. h