Question 1 (2 points)

Assume you have the following data:

C= $600 + 0.625Y_d

I = $806.25

G =$1125

EX - IM = 0

T = $250 + .2Y

Y^P = $5,000 [Potential GDP]

Calculate the demand function and indicate what the intercept of the demand function would be. For your answer only put the intercept for the demand function. [HINT: As an example, suppose the demand for was Z = 200 +0.5Y (THIS IS NOT THE ACTUAL ANSWER), the intercept term would be 200 and the unit value would be $]

Your Answer:

Question 1 options:

Answer	units

Question 2 (2 points)

Assume you have the following data:

C= $600 + 0.625Y_d

I = $806.25

G =$1125

EX - IM = 0

T = $250 + .2Y

Y^P = $5,000 [Potential GDP]

Calculate the demand function and indicate what the slope of the demand function would be. For your answer only put the slope for the demand function. [HINT: As an example, suppose the demand for was Z = 200 +0.5Y (THIS IS NOT THE ACTUAL ANSWER), the slope would be 0.5 and their would be no unit value and do not put the Y in the slope value]

Your Answer:

Question 2 options:

Answer

Question 3 (2 points)

Assume you have the following data:

C= $600 + 0.625Y_d

I = $806.25

G =$1125

EX - IM = 0

T = $250 + .2Y

Y^P = $5,000 [Potential GDP]

Solve for equilibrium GDP. [HINT: As an example, suppose equilibrium GDP was $2000 (THIS IS NOT THE ACTUAL ANSWER), the answer would be 2000 and their would be a $ unit value]

Your Answer:

Question 3 options:

Answer	units

Question 4 (2 points)

Assume you have the following data:

C= $600 + 0.625Y_d

I = $806.25

G =$1125

EX - IM = 0

T = $250 + .2Y

Y^P = $5,000 [Potential GDP]

Solve for the tax revenues when the economy is at equilibrium GDP. [HINT: As an example, suppose the tax revenues was $500 (THIS IS NOT THE ACTUAL ANSWER), the answer would be 500 and their would be a $ unit value]

Your Answer:

Question 4 options:

Answer	units

Question 5 (3 points)

Assume you have the following data:

C= $600 + 0.625Y_d

I = $806.25

G =$1125

EX - IM = 0

T = $250 + .2Y

Y^P = $5,000 [Potential GDP]

Comparing the economy's tax revenue when output is at equilibrium to government spending, we can conclude that the government is running a

Question 5 options:

	Cyclical Deficit
	Structural Deficit
	Surplus
	Balanced Budget