1. consider an economy in which autonomous consumption is 800, the marginal propensity to consume is 0.8, investment is 400, government spending is 500, taxation is 400, and net exports are 100.

a. what is the equilibrium gdp in this economy? show your work.

b. what is the savings at this level of gdp? show your work.

c. what are the spending and tax multipliers? show your work.

d. if government spending increases by 200, what is the new equilibrium gdp and what is the increase over the original equilibrium gdp? show your work.

e. if the government increases both spending and taxation by 200, what is the new equilibrium gdp and what is the increase over the original equilibrium gdp? show your work.

The treasurer for pittsburgh iron works wishes to use financial futures to hedge her interest rate exposure. she will sell five treasury futures contracts at $139,000 per contract. it is july and the contracts must be closed out in december of this year. long-term interest rates are currently 7.30 percent. if they increase to 9.50 percent, assume the value of the contracts will go down by 20 percent. also if interest rates do increase by 2.2 percent, assume the firm will have additional interest expense on its business loans and other commitments of $149,000. this expense, of course, will be separate from the futures contracts. a. what will be the profit or loss on the futures contract if interest rates increase to 9.50 percent by december when the contract is closed out

Abond purchased for $950 was sold for $980 after one year. the interest received during the year is $25. the bond's yield is:

Marc, a single taxpayer, earns $100,000 in taxable income and $10,000 in interest from an investment in city of birmingham bonds. using the u.s. tax rate schedule for year 2017, what is his average tax rate