Part 1. Determine the function of the underlined asset in each of the following situations. (2...

Transcribed Image Text:

Part 1. Determine the function of the underlined asset in each of the following situations. (2 points each) 1. Shaira uses cash to buy school supplies for her son. 2. After having her dinner, Moira swipes her debit card to pay for it. 3. Elaine went to the booth to encash her casino chips for actual money. 4. Toyworld Tokens are used to avail of various prizes. 5. Mikko opens a time deposit account to save the proceeds of his inheritance. Part 2. Read and understand the following word problems. Suppose that Salbakuta Republic, a Southeast Asian country, has an economy described by the following information: (1) C=50+0.8% (2) T = 70 (3) G=200 (4) TR=100 (5) T 50+0.2Y (6) AE=Y 1. What is the value of the multiplier? (2 points) 2. What is the equilibrium level of income? (3 points) 3. What is the value of the budget surplus? What can we say about the budget in this case? (3 points) 4. Suppose that t increases to 0.25. What is the new equilibrium income? (2 points) multiplier? (2 points) 5. Calculate the change in the budget surplus. (3 points) Suppose that the Congress decides to reduce transfer payments but to increase government purchases of goods and services by an equal amount. That is, it undertakes a fiscal policy where AG=-ATR. 1. Would you expect equilibrium income to rise or fall because of this change? Explain. (3 points) 2. Using the case of Salbakuta Republic above, assume that AT 10 and ATR-10. What is the new equilibrium income? (4 points) 3. What is the change in budget surplus? (3 points) Part 1. Determine the function of the underlined asset in each of the following situations. (2 points each) 1. Shaira uses cash to buy school supplies for her son. 2. After having her dinner, Moira swipes her debit card to pay for it. 3. Elaine went to the booth to encash her casino chips for actual money. 4. Toyworld Tokens are used to avail of various prizes. 5. Mikko opens a time deposit account to save the proceeds of his inheritance. Part 2. Read and understand the following word problems. Suppose that Salbakuta Republic, a Southeast Asian country, has an economy described by the following information: (1) C=50+0.8% (2) T = 70 (3) G=200 (4) TR=100 (5) T 50+0.2Y (6) AE=Y 1. What is the value of the multiplier? (2 points) 2. What is the equilibrium level of income? (3 points) 3. What is the value of the budget surplus? What can we say about the budget in this case? (3 points) 4. Suppose that t increases to 0.25. What is the new equilibrium income? (2 points) multiplier? (2 points) 5. Calculate the change in the budget surplus. (3 points) Suppose that the Congress decides to reduce transfer payments but to increase government purchases of goods and services by an equal amount. That is, it undertakes a fiscal policy where AG=-ATR. 1. Would you expect equilibrium income to rise or fall because of this change? Explain. (3 points) 2. Using the case of Salbakuta Republic above, assume that AT 10 and ATR-10. What is the new equilibrium income? (4 points) 3. What is the change in budget surplus? (3 points)

Answer rating: 100% (QA)

Answer The function of the underlined asset in each situation is as follows Cash Medium of exchange for purchasing school supplies Debit card Facilita... View the full answer