Business, 14.04.2020 23:34 bertha4082

Consider the following model of a very simple economy. Household saving and investment behavior depend in part on wealth (accumulated savings and inheritance). In the late 1990s many were concerned with very large increases in stock values (a form of wealth) and its possible effect on saving and investment. The following consumption function incorporates wealth (W) as a determinant of consumption. We have the following information on consumption (C) and investment (I): bullet C = 45 + 0.75Y + 0.10W bullet I = 150 bullet W = 1 comma 000 We are ignoring the fact that saving adds to the stock of wealth. Calculate the values of equilibrium Y, C, and saving (S). (Enter your responses as integers.) Y = $ nothing C = $ nothing S = $ nothing Suppose that wealth increases by 40 percent. Calculate the values of equilibrium Y, C, and S. (Enter your responses as integers.) New Y = $ nothing New C = $ nothing New S = $ nothing As a result of the wealth accumulation, GDP ▼ remains unchanged decreases increases .

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Consider the following model of a very simple economy. Household saving and investment behavior depe...

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