ZuoTi.Pro
Question

In the aggregate expenditures model, the equilibrium GDP is 2 Multiple Choice 03:53:37 always less than the full-employment Gplease answer

business   economics   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

In the aggregate expenditure model, the equilibrium occurs at the point where the aggregate expenditure equals aggregate income (AD curve intersecting the AS curve). The equlibrium GDP thus obtained is not necessary equal to the full employment GDP. Full employment GDP or potential GDP indicates the production capacity of the economy and is a long run concept. Whereas the equilibrium GDP is just the GDP at which AD=AS and in the short run it can be above, below or equal to the potential GDP. The answer is option (b).

0 0
Add a comment
Know the answer?
Add Answer to:
please answer In the aggregate expenditures model, the equilibrium GDP is 2 Multiple Choice 03:53:37 always...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Aggregate Expenditures 8 01:53:18 eBook B GDP Refer to the diagram. If the full-employment level of...

    Aggregate Expenditures 8 01:53:18 eBook B GDP Refer to the diagram. If the full-employment level of GDP is Band aggregate expenditures are at AE3, the Multiple Choice inflationary expenditure gap is BC. recessionary expenditure gap is BC Loo oo recessionary expenditure gap is ed. * 0 inflationary expenditure gap is ed. Consumption (8 01:51:33 0 Disposable Income eBook Suppose an economy's consumption schedule shifts from a to C2, as shown in the diagram. We can say that its Multiple Choice...

  • Answer the following questions, which relate to the aggregate expenditures model: Instructions: Enter your answer as...

    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...

  • Exhibit 8-8 Aggregate expenditures function Real consumption and Investment expenditures (trillions of dollars per year) om...

    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...

  • If the aggregate demand (AD) curve and the aggregate supply (AS)

    If the aggregate demand (AD) curve and the aggregate supply (AS) curve intersects at the level of real GDP less than potential GDP, there is a recessionary gap  an above full-employment equilibrium an inflationary gap  a falling real GDP

  • Answer the following questions, which relate to the aggregate expenditures model: Instructions: Enter your answer as...

    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...

  • Actual aggregate expenditure is Select one: a. always equal to real GDP. b. only equal to...

    Actual aggregate expenditure is Select one: a. always equal to real GDP. b. only equal to real GDP at the equilibrium level of aggregate planned expenditure. c. never less than real GDP but can be greater than real GDP. d. never greater than real GDP but can be less than real GDP.

  • 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: 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...

  • Please assist with the following: Using the AD/AS model, if the current equilibrium is in the...

    Please assist with the following: Using the AD/AS model, if the current equilibrium is in the steep section of the aggregate supply curve, then this suggests that: The economy is in recession GDP is substantially below potential OR Unemployment is low? Next: How does an economist depict cyclical unemployment on an aggregate demand-aggregate supply (AD-AS) diagram? Showing how close the economy is to potential or full employment level of GDP. By depicting the size of the inflationary gap or By...

  • Answer the following questions, which relate to the aggregate expenditures model: Instructions: Enter your answer as...

    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,...

  • 1. An above-full-employment equilibrium occurs when Group of answer choices aggregate demand decreases while neither the...

    1. An above-full-employment equilibrium occurs when Group of answer choices aggregate demand decreases while neither the short-run nor long-run aggregate supply changes. short-run aggregate supply decreases while neither aggregate demand nor long-run aggregate supply changes. the equilibrium level of real GDP is greater than potential GDP. the equilibrium level of real GDP is less than potential GDP. 2. Which of the following shifts the aggregate demand curve rightward? Group of answer choices a decrease in consumption an increase in investment...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT