Answer the following questions, which relate to the aggregate
expenditures model:
a. Given the following:
Ca = $120,
Ig = $60,
Xn = − $10, and
G = $40,
What is the economy’s equilibrium GDP?
Instructions: Enter your answer as a whole number.
Equilibrium GDP =
$ .
b. If real GDP in an economy is currently $240, will the economy’s
real GDP rise, fall, or stay the same? (Click to
select) Real GDP will fall Real GDP will
rise Real GDP will stay the same .
c. Suppose that full-employment (and full-capacity) output in an
economy is $240. If
Ca = $170,
Ig = $60,
Xn = − $10, and
G = $40,
a.
Ca = $120,
Ig = $60,
Xn = − $10, and
G = $40,
GDP=C+I+G+X-M
=120+60+40+(-10)-0
=$210
Equilibrium GDP is $210.
b.
If real GDP in an economy is currently $240,
Since potential GDP is greater than the actual real GDP, so real GDP will increase until it reaches to its potential level.
C.
Suppose that full-employment (and full-capacity) output in an economy is $240. If
Ca = $170,
Ig = $60,
Xn = − $10, and
G = $40,
GDP=C+I+G+X-M
=170+60+40+(-10)-0
=$260
Equilibrium GDP is $260.
Since real GDP in an economy is currently $240,
Since potential GDP is less than the actual real GDP, so real GDP will decrease until it reaches to its potential level.
Answer the following questions, which relate to the aggregate expenditures model: a. Given the following: Ca...
Answer the following questions, which relate to the aggregate expenditures model: Instructions: Enter your answer as a whole number. a. Given the following: Ca = $130, Ig = $60, Xn = − $10, and G = $40, what is the economy’s equilibrium GDP? b. If real GDP in an economy is currently $250, will the economy’s real GDP rise, fall, or stay the same? c. Suppose that full-employment (and full-capacity) output in an economy is $250. If Ca = $180,...
Answer the following questions, which relate to the aggregate expenditures model: Instructions: Enter your answer as a whole number. a. Given the following: Ca = $120, Ig = $60, Xn = − $10, and G= $30, what is the economy’s equilibrium GDP? b. If real GDP in an economy is currently $230, will the economy’s real GDP rise, fall, or stay the same? (Click to select) Real GDP will rise. Real GDP will fall. Real GDP stay the same. c. Suppose that full-employment...
Answer the following questions, which relate to the aggregate expenditures model: Instructions: Enter your answer as a whole number. a. Given the following: Ca = $130, 1g = $60, Xn=- $10, and G= $40, what is the economy's equilibrium GDP? Equilibrium GDP = D . b. If real GDP in an economy is currently $250, will the economy's real GDP rise, fall, or stay the same? (Click to select) c. Suppose that full-employment and full-capacity) output in an economy is...
Exhibit 8-8 Aggregate expenditures function Real consumption and Investment expenditures (trillions of dollars per year) om 0 1 2 3 4 5 6 7 8 9 10 Real disposable income (trillions of dollars per year) 23. In Exhibit 8-8, what is the households' marginal propensity to consume (MPC)? 20.5. c. 0.8. b. 0.75 d. 1. 24. Using the Keynesian aggregate expenditures model, which of the following is true? a Macro equilibrium may occur at levels of real GDP other than...
Refer to the accompanying table in answering the questions that follow: Aggregate Expenditures (Catlg+Xn+G), Billions 420 Real Domestic Output, Possible Levels of Employment, Millions 70 90 110 130 150 Billions 400 450 460 500 540 580 600 a. If full employment in this economy is 150 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? (Click to select) What will be the consequence of this gap? (Click to select) By how much would aggregate expenditures in...
(1) Other things being equal, which of the following will increase aggregate expenditures? Group of answer choices An increase in domestic prices relative to foreign prices A decrease in the interest rate A decrease in real wealth An increase in income taxes A decrease in government purchases of goods and services (2) If the current unemployment rate is 5 percent and the natural unemployment rate is 6 percent, then the economy is Group of answer choices producing a level of...
Answer the following questions using the aggregate expenditures model of the economy described below. C = 900 + 0.5 Yd T=95 1 = 300 G = 300 X = 350 M = 0.1 Y (a) What are the marginal propensity to consume Number , and the marginal propensity to import Number (b) What is the marginal propensity to save? Number (c) The saving function is: S = Number + Number Yd. (d) What is the value of Ye? Number (e)...
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Refer to the accompanying table to answer the questions that follow. (1) (2) (3) Real Domestic Output, Billions Aggregate Expenditures (Ca + lg + Xn + G), Billions $520 $500 Possible Levels of Employment, Millions 90 100 110 120 130 550 560 600 650 700 600 640 680 a. If full employment in this economy is 130 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? Inflationary expenditure gap What will be the consequence of this...
An inflationary gap is the amount by which aggregate expenditures ____ the amount required to achieve full-employment equilibrium GDP. exceed equal fall short of are greater than