Question

instant Virtual Extra iz #2 (Business Cycles, Un.& Infl., Aggregate Exp. Model & Aggregate De... Saved 13 The graph below shows the consumption schedule for Zamunda. Research has yielded the following information about Zamunda: At the current interest rate, gross investment (1) is $500. government purchases (G) are $800, exports are $400, and imports are $200. Instructions: In part a, enter your answer as a whole number. In part cround your answers to 1 decimal place. a. By supplementing the consumption schedule in the graph below to include the expenditures for gross investment (1) government purchases (G), and net exports (NX) stated above, what is the new value of the vertical intercept? 8 00:51.34 b. In the graph below, create an aggregate expenditures schedule by including the expenditures for gross investment (1. government purchases (G), and net exports (NX), and indicate the new equilibrium level of real GDP for the complete aggregate expenditures schedule Instructions: Use the tool provided AE to show the complete aggregate expenditures schedule that includes the values for IG, and NX. Then use the tool 'New Equilibrium' to indicate the new equilibrium level of real GDP Aggregate Expenditures Schedule Aggregate Expenditures (dollars) 28,000 AEY Tools 27,000 AE 26,000 New Equilibri 25,000 24,000 23,000 22,000 21,000 20,000 21,000 20,000 28,000 22.000 Disposable Income (dollars) 29.000 4.000 15,000 26.000 27,000

Answer 1

a) con autonomous The consumption from graph 22000 The value of ractical intercept! C+I+G+x-M 200 = 22000 + 500+ 800+400 28500 11 b) The expenditure schedule is depicted below: Aggregate Expenditures Schedule Aggregate Expenditures (dollars) 28,000 AE-Y E' AE=C+I+G+X-M) 27,000 26,000 25,000 E 24,000 23,000 22,000 O 21,000 22,000 21.000 20.000 28,000 27,000 26,000 25000 24,000 20.000 Disposable Income (dollars) C) slope of consumption fonction: EA 24000 - 22000 Flo' 5 ОА 240 0 - 20 000 2 As inclusion of of @ I, G, x ,M does not change the slope slope of inclusion in of AE. The also O'5 which d) the slope of AE measures in ato also slope of consumption, measures dure changes in consumption one unit change in a. slope This is called the marginal propensity to mpc Then the AC AY consume or