1.
Part 1: 20 questions worth 3 points each for a total of 60 points.
FOR FILL-IN-THE-BLANK questions: If your answer is in decimal form, round to 2 decimal places. For
example, if your answer is .412, enter it into t
...
1.
Part 1: 20 questions worth 3 points each for a total of 60 points.
FOR FILL-IN-THE-BLANK questions: If your answer is in decimal form, round to 2 decimal places. For
example, if your answer is .412, enter it into the fill-in-the-blank as .41, or if your answer is 1.415, enter it into
the fill-in-the-blank as 1.42. If there are no decimals in your answer, you will simply enter the number; so if your
answer is 2, enter 2 with no decimals. Do not enter any extra spaces, do not enter commas or $ or % symbols.
Suppose the consumption function is: C = a1 Yd + a2 WRE/S + a3CC Where all the a’s (the sensitivity
parameters) are greater than zero. Initial conditions: Let a1 = 0.60, a2 = 0.04, a3 = 0.5, WRE/S = 18,000: CC =
90 Solve for C in terms of Yd. Select the correct equation below.
A) C = 720 + .60 Yd
B) C = 765 + .60 Yd
C) C = 765 + .64 Yd
D) C = 90 + .60 Yd
E) None of the above are correct
Table for Individual Question Feedback
Points Earned: 3.0/3.0
Correct Answer(s): B
2.
Use the equation you found in #1 and let Yd = 2000. C is equal to
1965
.
Table for Individual Question Feedback
Points Earned: 3.0/3.0
Correct Answer(s): 1965
3.
Suppose that the stock market rallies so that WRE/S increases to 22,000. Additionally, consumer confidence
(CC) rises to 100. Re-solve for C in terms of Yd. Select the correct equation below.
A) C = 720 + .65 Yd
B) C = 880 + .60 Yd
C) C = 765 + .64 Yd
D) C = 930 + .60 Yd
E) None of the above are correct
Table for Individual Question Feedback
Points Earned: 3.0/3.0
Correct Answer(s): D
4.
Now suppose disposable income (Yd) falls due to a tax increase (Uncle Sam is trying to balance the budget) to
1800. Solve for the level of consumption using the equation you found in #3. Consumption (C) is equal
to
2010
.
Table for Individual Question Feedback
Points Earned: 3.0/3.0
Correct Answer(s): 2010
5.
Now we will calculate the level of consumption that would have occurred if Uncle Sam did not raise taxes. In
other words, use the equation you found in question 3, but keep Yd at its original value of 2000. Consumption
(C) is equal to
2130
.
Table for Individual Question Feedback
Points Earned: 3.0/3.0
Correct Answer(s): 2130
6.
Look at the consumption values you calculated in #2 and #4. The percent change in consumption between
those values is
5.97
%
NOTE: There is no graphing component to be collected for this homework. However, you should be
comfortable graphing the equations you found in #1 and #3. You should also be able to plot the points you
found in #2, #4 and #5.
Feedback:
NOTE: There is no graphing component to be collected for this homework. However, you should be
comfortable graphing the equations you found in #1 and #3. You should also be able to plot the points you
found in #2, #4 and #5.
Table for Individual Question Feedback
Points Earned: 0.0/3.0
Correct Answer(s): 2.29
7.
Use the table below for questions 7 & 8. L
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