equilibrium output to S6 trillion. AS) that t. What is the price level at this new...
10 percent Chapter 11 umers to spend more of their income on goods and services, What factors might cause cons thereby shifting the AD curve rightward? t follows epts aggregate supply and demand conditions in an 2. rs when S6 trillion of real output is produced. economy. Full employment occurs when S6 trillion a. What is the equilibrium rate of output? b. How far short of full employment is the equilibrium rate of output? c. IlIlustrate a shift of aggregate...
a. Reynes digu . Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment?
AS AD 50100 200 300 400 500 600 700 REAL OUTPUT (in bilions of dollans per year) following graph depicts a macro equilibrium. Answer the questions based on the information in the graph. (a) What is the equilibrium rate of GDP? (b) If full-employment (c) How large is the real GDP gap? real GDP is S1200, what problem does this economy have? IEshe multiplier were equal to 4, how much additional investment would be needed to increase aggregate demand by...
For a real Keynesian model of a mixed economy with a marginal propensity to consume equal to .8 and autonomous consumption equals 600 billion, planned investment equals 100 billion, government spending equals 300 billion, and taxes equal 300 billion: a. Calculate the equilibrium level of Ye or real output. b. Draw a diagram that illustrates the equilibrium condition for the model, the equilibrium level of output, and the level of autonomous spending. Be sure to carefully label your diagram, including...
Assume the economy as reflected in the equilibrium point of AD/AS is at full employment GDP at an output of $17 trillion Consumer confidence has increased with news of large stock market gains. As a result, $ 1 trillion dollars of spending increases from consumers. What happens initially to AD and what is the level of output now? Assuming a mpc of 0.8, what will happen to real GDP after all rounds of spending have been completed? Show your calculation...
In a simple economy (no government sector), the equilibrium level of GDP will be less than the full employment level of income if, at the full employment level of income, the a. saving that consumers want to do is greater than investing that businesses want to do. b. saving that consumers want to do is less than investing that businesses want to do. c. inventories are being depleted. d. saving that consumers want to do is less than spending that...
Question 6 (2 points) If equilibrium output and income (Y) is 1,000 less than potential output at full employment (Y), and the marginal propensity to consume is 0.8, how much additional autonomous spending is needed to reach full employment (that is, what is the recessionary gap)? If the government decreased total taxes out of income (T), how much would the tax cut have to be to bring the economy to full employment? Question 72 points) Circle the correct set of...
1. GDP is _____ 11
trillion/ 16 trillion/ 10 trillion / 14 trillion /12
trillion
2. currently _____ recessionary gap / inflationary
gap
3. of ______ 4 trillion / 1 trillion / 5 trillion / 2
trillion / 3 trillion
4. the Fed will ____ increase / decrease
5. which will _____ increase/ decrease
6. incentive to ____ increase / decrease
7. shifting the ____ AD / SRAS / LRAS
8. curve to the ____ left / right
9. relatively high...
suppose the actual GDP is $15 trillion & the potential real GDP is $18 trillion. If the MPS is .03 What kind of GDP is this economy experiencing? what kind fiscal policy & monetary policy would u recommend to eliminate the gap (include a graph to illustrate the relationship) By how much the government should change taxes to eliminate the gap?
1. Country ABC is experiencing the following situation. Its current aggregate demand is illustrated as AD, producing $10 trillion worth of output. Suppose that the full employment output level/potential output of this country is 12 trillion. Suppose MPS=0.1 and MPI=0.1 a) Does this economy have an inflationary output gap or recessionary output gap? How much? Label the output gap on the above diagram. b) If you were the Finance Minister,what would be the fiscal policies that you might use to...