Boeing:how low can they fly? Essay

Prepare problems 3, 5 and 7 on pp.521 and the additional problem, Principles of Economics, Case, Fair and Oster.Problem 3 p.521For distributively of the pursuit statements, decide wether you agree or disagree and explain your answer 1. During period of budget surplus (when ? ? ), the organisation debt grows. 2. A tax cut testament addition the chemical equilibrium level of GDP if the budget is in decit but will decrease the equilibriumm level of GDP if the budget is in surplus. 3. If the ? ? ? = 0.90, the tax multiplier is in reality larger than the expenditure multiplier. Problem 5 p.521Expert economists in the economy of Yuk estimate the following Real output/income 1000 billion YuksGovernment purchases two hundred billion YuksTotal net taxes two hundred billion YuksInvestment disbursal (planned) 100 billion YuksAssume that Yukers consume 75 percent of their disposable incomes and merely 25 percent. 1. You are asked by the business editor of the ? to predict the event s of the next few months. By using the data given, make a forecast. (Assume that investment is constant.)2. If no changes were made, at what level of GDP (? ) would the economy of Yuk settle ? 3. Some local conservatives blame Yuks problems on the size of the presidency sector. They suggest cutting government purchases by 25 billion Yuks. What effect would such cuts have on the economy ? (Be specic)1Problem 7 p.521Assume that in 2008, the following prevails in the Republic of Nurd Y=200$C=160$S=40$I(planned)=30$G=0$T=0$Assume that households consume 80% of their income, they save 2% of their income, ? ? ? = 0.8 and ? ? ? = 0.2. That is, ? = 0.8 and ? = 0.2 . 1. Is the economy of Nurd in equilibrium ? What is Nurds equilibrium level of income ? What is likely to happen in the coming months if the government takes no movement ? 2. If 200$ is the full-employment level of ? , what scal policy might the government follow if its goal is full employment ?3. If the full-employment leve l of ? is 250$, what scal policy might the government follow ? 4. recall ? = 200$, ? = 160$, ? = 40$ and ? = 40$. Is Nurds economy in equilibrium ? 5. Starting with the situation in part (4), suppose the government starts spending 30$ each year with no taxation and continues to spend 30$ every period. If ? remains constant, what will happen to the equilibrium level of Nurds interior(prenominal) product (? ) ? What will the new level of ? and ? be ?6. Starting with the situation in part (4), suppose the government starts taxing the population 30$ each year without spending anything and continues to tax at that rate every period. If ? remains constant, what will happen to the equilibrium level of Nurds domestic product (? ) ? What will the new level of ? and ? be ?. How does your answer to this question differ from your answer to question (5) ? Why ?2Additional problemINCOME2000300040005000600070008000900010000TABLE 1 Add captionTAXCGI 200 1400 1600 1000200 1900 1600 1000200 2400 1 600 1000200 2900 1600 1000200 3400 1600 1000200 3900 1600 1000200 4400 1600 1000200 4900 1600 1000200 5400 1600 1000?1. Fill in the disposable income ( ) and the saving (?) columns. 2. Dene equilibrium income/output and then nd the equilibrium income / output by two different methods.3. Dene ? ? ? and ? ? ?, and nd their numerical value. 4. How a great deal is the Government expenditure multiplier ? What is the formula ? Consumption multiplier ? What is the formula ? Investment multiplier ? What is the formula ? Tax multiplier ? What is the formula ?5. From the above data Derive the consumption equating Derive the saving equation Derive the investment equation Derive the government expenditure equation6. What will be the new equilibrium income when the government increases its expenditure from 1600 to 3100 ?7. What will be the new equilibrium income when the government increases the taxes from 200 to 1200 ?8. Assume that the equilibrium level on income/output is the one found i n question (2) above. If the potential income/output is 9000 and the government intends to bring the economy to the potential level By how much government expenditures should increase/decrease ? Explain. By how much taxes should increase/decrease ? Explain.3