how to print barcode in crystal report using vb.net 3: Unemployment, In ation, and Income in Java

Creation Code 128B in Java 3: Unemployment, In ation, and Income

CHAPTER 3: Unemployment, In ation, and Income
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aggregate demand or aggregate supply What happens to equilibrium output and the price level d. Suppose there is a technological advance rather than an increase in government spending. What happens to aggregate demand Aggregate supply Equilibrium output The price level
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36 PRINCIPLES OF ECONOMICS
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Solution: a. Figure 3-3 depicts a classical aggregate supply curve since it shows no relationship between aggregate output and the price level. b. Equilibrium exists where the aggregate demand curve intersects the aggregate supply curve. Equilibrium for curves AD and AS exists at point A; the price level is p0 and output is y1. c. Increased government spending results in an outward shift of aggregate demand. There is no change in aggregate supply since there has been no change in the economy s ability to produce goods and services. If aggregate demand shifts from AD to AD , then equilibrium now exists at point B. Equilibrium output remains at y1 and equilibrium prices increases from p0 to p2. d. The technological advance has no effect on aggregate demand, but it shifts aggregate supply rightward from AS to AS . Equilibrium changes from point A to point C. Equilibrium output has increased from y1 to y2, while the price level has decreased from p0 to p1. Solved Problem 3.4 a. What effect does unanticipated in ation have upon: (1) individuals who are retired and living on a xed income; (2) debtors, and (3) creditors b. How does indexation protect one from the redistribution effect of in ation Solution: a. (1) Unanticipated in ation lowers the real income of those on a xed income. An increase in the price level reduces the purchasing power of a xed nominal income; the result is the purchase of fewer goods and services. (2) Debtors bene t from unanticipated in ation since the dollars they pay back have less purchasing power. (3) Creditors (lenders), on the other hand, lose from unanticipated in ation since the dollars they are repaid purchase fewer goods and services. b. Indexation ties money payments to a price level so that the sum of money payments rises proportionately with the price level. For example, a $20,000 salary would increase to $22,000 when the monetary payments of $20,000 are indexed and there is a 10 percent increase in the price level.
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Consumption, Investment, Net Exports, and Government Expenditures
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Consumption Investment Net Exports Government Taxes and Expenditures True or False Questions Solved Problems Consumption
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Because consumption represents two-thirds of total aggregate spending in the U.S., understanding the determinants of consumer spending is central to any analysis of the economy s level of output. Consumer spending
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38 PRINCIPLES OF ECONOMICS
is largely determined by personal income, income taxes, consumer expectations, consumer indebtedness, wealth, and price level. Since consumption is impossible for most individuals without income from employment or through transfers from business or government, personal income is the most important of these variables. Personal income taxes are also central in that one s ability to spend depends not upon the income received but on the income available for spending. A consumption function is the relationship of consumption to disposable income, holding nonincome determinants of consumption constant. Figure 4-1 plots the consumption function for a hypothetical economy, labeled C . A change in a nonincome determinant of consumption alters the relationship of consumption to disposable income. Such changes are depicted graphically by upward or downward shifts of the consumption function. Shifts of the consumption function affect the level of consumption and saving. The 45 line in Figure 4-1 is equidistant from both the consumption and disposable income axes. As drawn, C = Yd at each point on this 45 line. For linear consumption function C , there is only one level of disposable income at which consumer spending equals disposable income, and that is the point of intersection of the consumption line and the 45 line. Since the consumption line is below the 45 line at disposable income levels above $500 billion, it follows that consumers are not consuming their entire income and therefore are saving. Thus, consumer saving is the distance between the consumption line and the 45 line at each level of disposable income. Example 4.1 Should consumers expect an increase in the price level, they are likely to spend more in the current period before prices rise. An upward shift of consumption function C to C in Figure 4-1 results. We now nd that at disposable income of $500 billion, consumption exceeds disposable income, i.e., consumers are dissaving. (Consumers can dissave by borrowing or by spending accumulated savings). Consumption now equals disposable income when Yd is $600 billion; for consumption function C there is less saving at each level of disposable income than there is for consumption function C .
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