Homework Answers
$ 6 trillion
The economy will be in equilibrium when aggregate expenditure is equal to national income.
Aggregate expenditure =C(consumption expenditure)+I (investment expenditure)
National income is represented by the 45 degree line.
So national income and aggregate expenditure is equal at $6 trillion. Therefore economy is in equilibrium at $6 trillion.
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Exhibit 2 Aggregate expenditures function 000 Real consumption and investinent expenditures (trillions of dollars per year)...
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...
Figure: Aggregate Expenditures Curve III 3. Aggregate expenditures (per year) 45-degree line AE $800 $3.200 Real GDP (per year) . (Figure: Aggregate Expenditures Curve IlI) According to the figur...
Figure: Aggregate Expenditures Curve III 3. Aggregate expenditures (per year) 45-degree line AE $800 $3.200 Real GDP (per year) . (Figure: Aggregate Expenditures Curve IlI) According to the figure Aggregate Expenditures Curve III, suppose that the economy is at the equilibrium real GDP of $3,200. Suppose that the consumption function in this figure rises by $100. What will the new equilibrium real GDP be? Show your work.
Figure: Aggregate Expenditures Curve III 3. Aggregate expenditures (per year) 45-degree line AE...
Aggregate expenditures (per year) .000 Real GDP per year) increase in the equilibrium level of In...
Aggregate expenditures (per year) .000 Real GDP per year) increase in the equilibrium level of In the diagram shown, the MPC -0.5. Suppose Planned Investment spending rises by $100. The result would be real GDP. QUESTION 23 The downward sloping line that illustrates how Y* (the equilibrium quantity of real GDP in the 45 degree line diagram) varies as the price level varies is called
Assume that the following graph depicts aggregate supply and demand conditions in an economy. Full employment...
Assume that the following graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when $5 trillion of real output is produced. The economy is currently in equilibrium at point A. 260 AS, 240 AS2 220 200 Price Level (average price) 180 160 AD2 140 120 ADA 100 0 2 3 7 8 Real Output (in trillions per year) Instructions: For parts (a) and (b) enter your answer rounded to the nearest whole number (a) What is...
LRAS 150-n 1301 11아- Aggregate Deri 10 11 12 Real GDP per Year (S trillions) In the above figure...
LRAS 150-n 1301 11아- Aggregate Deri 10 11 12 Real GDP per Year (S trillions) In the above figure, the long-run equilibrium price level is Price Level AD2 AD1 Real GDP per Year in the above figure a movement from point B to point A can be explained by In the above figure, a movement from point B to point A can be explained by 1) a drop in the price level. 2) an increase in spending due to a...
Keynesian Consumption Function (billions of dollars per year) Real disposable income Consumption Saving MPC MPS $100...
Keynesian Consumption Function (billions of dollars per year) Real disposable income Consumption Saving MPC MPS $100 200 300 400 500 $150 200 250 300 350 a.) Calculate the saving schedule. b. Determine the marginal propensities to consume (MPC) and save (MPS). c. Determine the break-even income. d.) What is the relationship between the MPC and the MPS? 3. Explain why the MPC and the MPS must always add up to one. 4. How do households "dissave" 5. Explain how each...
Problem 11-7 (Algo) Refer to columns1 and 6 In the table below. Aggregate Expenditures Real Domes...
Problem 11-7 (Algo) Refer to columns1 and 6 In the table below. Aggregate Expenditures Real Domestic DI), Billions 5300 5350 5400 5450 $500 $550 5600 $650 Aggregate Exports Billions Output, (GDP Imports, BillionsBillions Net ExportsExpenditures Private Closed Economy, Billions 5340 S380 5420 5480 $500 $540 $580 $620 S30 S30 S30 S30 S30 S30 S30 S30 S20 S20 S20 S20 S20 S20 S20 S20 510 510 510 510 510 510 510 510 Private Open Economy, Billion:s S350 390 S430 S470 S510...
K/L Real GDP 0 0.0 1. Use the data below to plot the production function. Capital...
K/L Real GDP 0 0.0 1. Use the data below to plot the production function. Capital Labor 40 100 150 200 250 40 40 22.1 29.0 35.1 40.7 2. Consider the table below for the market for loanable funds. Real Interest Investment Saving Rate (trillions of (trillions of (% per year) 1996 dollars) 1996 dollars) 2 15.5 8.0 4 14.0 I 9.0 6 12.5 10.0 8 11.0 11.0 10 9.5 12.0 and the level of saving and a. The market...
Exhibit 5-8 GDP data (billions of dollars) Personal consumption expenditures $850 Interest 90 Corporate profits 150...
Exhibit 5-8 GDP data (billions of dollars) Personal consumption expenditures $850 Interest 90 Corporate profits 150 Government spending 400 Depreciation 100 Rental income 70 Gross private domestic investment 120 Compensation of employees 830 Exports 120 Imports 70 Indirect business taxes 80 Proprietors' income 120 Personal income taxes 110 Social Security taxes 50 Transfer payments 160 In Exhibit 5-8, disposable personal income (PI) is: $2,180 billion. $1,200 billion. $2,210 billion. $1,180 billion. $1,290 billion.
1. In a closed economy to have sustainable output, Aggregate Expenditures are equal to
1. In a closed economy to have sustainable output, Aggregate Expenditures are equal toa. Consumptionb. Consumption + Investmentc. Consumption + Investment + Govemmentd. Consumption + Investment + Net Exports2. The calculation 1 /(1-MPC) equalsa. Marginal Propensity to Saveb. Multiplierc. Aggregate Expenditured. Average Consumption3. In a closed economy, when Aggregate Expenditures equal GDP.a. Consumption equals investmentb. Consumption equals aggregate expenditurec. Saving = Planned Investmentd. Disposable income equals consumption minus saving4. Net exports are calculated asa. Importsb. Imports - Exportsc. Exports -...
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...
Figure: Aggregate Expenditures Curve III 3. Aggregate expenditures (per year) 45-degree line AE $800 $3.200 Real GDP (per year) . (Figure: Aggregate Expenditures Curve IlI) According to the figure Aggregate Expenditures Curve III, suppose that the economy is at the equilibrium real GDP of $3,200. Suppose that the consumption function in this figure rises by $100. What will the new equilibrium real GDP be? Show your work.
Figure: Aggregate Expenditures Curve III 3. Aggregate expenditures (per year) 45-degree line AE...
Aggregate expenditures (per year) .000 Real GDP per year) increase in the equilibrium level of In the diagram shown, the MPC -0.5. Suppose Planned Investment spending rises by $100. The result would be real GDP. QUESTION 23 The downward sloping line that illustrates how Y* (the equilibrium quantity of real GDP in the 45 degree line diagram) varies as the price level varies is called
Assume that the following graph depicts aggregate supply and demand conditions in an economy. Full employment occurs when $5 trillion of real output is produced. The economy is currently in equilibrium at point A. 260 AS, 240 AS2 220 200 Price Level (average price) 180 160 AD2 140 120 ADA 100 0 2 3 7 8 Real Output (in trillions per year) Instructions: For parts (a) and (b) enter your answer rounded to the nearest whole number (a) What is...
LRAS 150-n 1301 11아- Aggregate Deri 10 11 12 Real GDP per Year (S trillions) In the above figure, the long-run equilibrium price level is Price Level AD2 AD1 Real GDP per Year in the above figure a movement from point B to point A can be explained by In the above figure, a movement from point B to point A can be explained by 1) a drop in the price level. 2) an increase in spending due to a...
Keynesian Consumption Function (billions of dollars per year) Real disposable income Consumption Saving MPC MPS $100 200 300 400 500 $150 200 250 300 350 a.) Calculate the saving schedule. b. Determine the marginal propensities to consume (MPC) and save (MPS). c. Determine the break-even income. d.) What is the relationship between the MPC and the MPS? 3. Explain why the MPC and the MPS must always add up to one. 4. How do households "dissave" 5. Explain how each...
Problem 11-7 (Algo) Refer to columns1 and 6 In the table below. Aggregate Expenditures Real Domestic DI), Billions 5300 5350 5400 5450 $500 $550 5600 $650 Aggregate Exports Billions Output, (GDP Imports, BillionsBillions Net ExportsExpenditures Private Closed Economy, Billions 5340 S380 5420 5480 $500 $540 $580 $620 S30 S30 S30 S30 S30 S30 S30 S30 S20 S20 S20 S20 S20 S20 S20 S20 510 510 510 510 510 510 510 510 Private Open Economy, Billion:s S350 390 S430 S470 S510...
K/L Real GDP 0 0.0 1. Use the data below to plot the production function. Capital Labor 40 100 150 200 250 40 40 22.1 29.0 35.1 40.7 2. Consider the table below for the market for loanable funds. Real Interest Investment Saving Rate (trillions of (trillions of (% per year) 1996 dollars) 1996 dollars) 2 15.5 8.0 4 14.0 I 9.0 6 12.5 10.0 8 11.0 11.0 10 9.5 12.0 and the level of saving and a. The market...
1. In a closed economy to have sustainable output, Aggregate Expenditures are equal toa. Consumptionb. Consumption + Investmentc. Consumption + Investment + Govemmentd. Consumption + Investment + Net Exports2. The calculation 1 /(1-MPC) equalsa. Marginal Propensity to Saveb. Multiplierc. Aggregate Expenditured. Average Consumption3. In a closed economy, when Aggregate Expenditures equal GDP.a. Consumption equals investmentb. Consumption equals aggregate expenditurec. Saving = Planned Investmentd. Disposable income equals consumption minus saving4. Net exports are calculated asa. Importsb. Imports - Exportsc. Exports -...
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