Suppose AE = 1,000 + 0.2 Y. According to the multiplier equation, equilibrium income will be:
A. $1,000
B. $1,250
C. $2,500
D. $3,750
Answer
The equilibrium is at AE=Y
equating it
Y=1000+0.2Y
0.8Y=1000
Y=1250
the equilibrium income is $1250
Option B
Suppose AE = 1,000 + 0.2 Y. According to the multiplier equation, equilibrium income will be:...
Question 1 Answer parts (a) - (d) below on the basis of the following table. Income (Y) Change in Income (ΔY) Aggregate Expenditures (AE) Change in Aggregate Expenditures (ΔAE) 0 500 500 950 1000 1400 1500 1850 2000 2300 2500 2750 3000 3200 (a) Fill in columns (2) and (4). (b) What is the value of autonomous expenditures? (c) What is the value of the MPE? (d) What is the AE equation? Question 2 Answer parts (a) - (e) below...
100Y 0-300 Respond to the following questi The equilibrium level of income (Y) is* Y=5,000 Y=6,000 Y=1,000 Y=7,000 If autonomous investment increases by 200, by how much aggregate expenditure (AE) is going to change? * 2,000 200 0 2,222.22 222.22 The equation of total expenditure (AE) function is AE= 0.9Y+100 AE=0.1Y500 AE=0,9Y+700 AE=Y+600 Suppose that potential output is $4,000. What is the state of the economy? Recession Inflation Stagflation Contraction The consumption function is * C=-100-0.18 C=100+0.9Y C=-100+0.9Y O C=100+0.17
Question 25 1 pts What is the nation's Marginal Propensity to Consume? Y-AE AE = C + | C = 1,200 + 0.6Y 1 = P = 200 Question 26 1 pts What is the nation's Marginal Propensity to Save? YAE AE = C + C - 1,200+ 0.6Y 1-IP = 200 Attc 1 H Question 27 1 pts By only considering the consumer sector (C) of AE, how much would the nation consume if the nation only produced Y...
Suppose the equation of an economy's Aggregate Planned Expenditure function is AE = 75y + 800. What is the value of the equilibrium level of real GDP (denoted Y*)? Y* = [x]
Why is the answer 84.03 and how is it calculated? Q: Suppose that equilibrium income is 3200 and the multiplier is 2.38. Equilibrium income would rise to 3400 if government spending was? A= 84.03
QUESTION 18 Suppose the equation of an economy's Aggregate Planned Expenditure function is AE - 75y + 800. What is the value of the equilibrium level of real GDP (denoted Y*)? Y* = [X] QUESTION 19 Suppose the equation of an economy's Aggregate Planned Expenditure function is AE - 75y + 800. If real GDP - $1000, unplanned inventory investment will be $. so firms will have incentive to output next period.
Question 3: Multiplier Model (20 Points] Suppose the components of a closed economy can be described by the following set of equations: Y=C+I+G C= 1200 +0.8 (Y-T) I = 750 G = 900 T=950 (a) Is the government currently running a balanced budget, a budget deficit or a budget surplus? Explain. [3 Points (b) Calculate the equilibrium income. [6 Points) (c) Graphically illustrate, using the Keynesian Cross Diagram, the effect of a decrease in government spending on equilibrium output. [5...
- Assume that $1200 represents full employment and that the spending multiplier is 4. 'Alr AE, t(5,49) (Carlanta), (Cathaton), . Ai (COL), - 40 2. AHA AE = As+byd 1,090 1,200, 1:400 NI/GDP" Ye 2 A recessionary gap of $50 billion exists when the conomy produces an income of $1000 billion a. The b. False it should be $ 200 billion 'c False : it should be $300 billion d. Cannot be determined.
Suppose both X and Y are independent and distributed according to Geo(0.2). Compute P(min{X,Y} < 4).
Y=C+I+G.Y=8,000.G=2,500.T=2,000.C=1,000+2/3 (Y-T).I=1,200-100 r. = C+I+G = 8,000. G = 2,500. T = 2,000. C = 1,000+2/3 (Y – T'). I = 1,200 - 100 r. a. In this economy, compute private saving, public saving, and national saving. b. Find the equilibrium interest rate. C. Now suppose that G is reduced by 500. Compute private saving, public saving, and national saving. d. Find the new equilibrium interest rate.