Question

endrid-side Equiorum: Unemployment or Inflation? 1. Aggregate expenditure and income The following table shows consumption (C), investment (1), government purchases (G), and net exports (X-IM) in a hypothetical economy for various levels of real GDP (Y). Assume that the price level remains unchanged at all levels of income. All figures are in billions of dollars. 550 Compute total expenditure for each income level, and fill in the last column in the following table. Y c 1 G X -IM Total Expenditure 500 300 150 200 -100 600 350 150 200 -100 600 700 400 150 200 -100 650 800 450 150 200 -100 700 900 500 150 200 -100 750 The following graph shows income (Y) on the horizontal axis and total expenditure (TE) on the vertical axis. The grey line represents a 45-degree (Y = TE) line. Use the blue points (circle symbol) to plot the total expenditure line for this economy at an income of $500 billion, $600 billion, $700 billion, $800 billion, and $900 billion. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.

Answer 1

900- 800 700 t RB coordenades of Rearl expenditure (RB) are (500, 550, 1600, 600) .. (700, 650), (800,700) (900, 750) 600 500 ) billion 500 600 700 800 900 Real UAP equilibrium is at A where Y = All RB and real eLDP is $600 billion dollars as and ke suppon udp is 500 if p leul remains constant aggregate expenditure exceeds current contput by & 50 billion which would send a signal to firms to increan produceren . MPC = AC 350-300 - 50 = 0.5 600-500 100 So, mulliphage - Impc = 7-015 - 05 = 2