Question

answer 1,2 and 3

EXERCISES the data in Table 10.1, determine the economic equilibrium for a government spending 1. Using the data in level of 60. 2. Using Table 10.1 and multiplier, calcu 3. Go to the Table 10.1 and the formulas and numbers given in the text for the multiplier and tax einlier, calculate the effect on equilibrium GDP of a government spending level of 100 ined with a tax level of 100. What does this imply about the impact of a balanced gov ment budget on GDP, compared to government spending alone? to the Economic Report of the President at www.gpoaccess.gov/eop/. Consult the most rent Report's table on "Gross Domestic Product." For the last year with final rather than reliminary figures, find the values of gross domestic product personal consumption expen Altures, and gross private domestic Investment. Now find the value for fixed investment. If we assume that all inventory changes are unintended, fixed Investment is the same thing as what we call intended investment. You will note that the column on the right titled "Change in Private Inventories" is equal to the difference between total and fixed investment (just as we have noted that total investment equals intended investment plus change in inventories), Calculate personal consumption expenditures (C) and intended Investment (1) as percentages of gross domestic product (Y). Calculate a simple measure of aggregate expenditure (C+D without government spending.

Answer 1

Ho - Incomel Consumpth New AE. Covernment / spending 300 I Investment toot 60 60 26. 340 60/ 3A Original Agg. Exp. 320 yoo 480 560 460 6ou ५२० 500 540 Thoo ha 60 520 660 60 640 72o 620 too 7 do 60 At Government spending and equal to $60, the economic equilibrium occurs when income £ $700 where Income - Planned Aggregate expenditure in the economy. A-2) oya – MPC x oT + 1 x OG 1- Mic I-MPC = I-MPC.OG LOG=OT) -MPC Oya OG Thus Increase in income = 9 10o. Gouernment spending alone will increase GOP by a larger amount as compared to the balanced budget case A-3) Abusive as hrik to site is ginen.