A) Equilibrium level of GDP=500 Billion because aggregate expenditure= Real domestic output
Thus there will be recessionary gap of $100billion
Thus aggregate expenditure would have to increase by $20billion
Multiplier in this example 100/20=5
B) Full employment output=400billion
thus an inflationary Gap of $100billion
Aggregate expenditure has to decrease by $20 billion
again multiplier=100/20=5
c)MPC=40/50=0.8
MPS=1-MPC=1-0.8=0.2
Mulriplier=1/1-Mpc=1/1-0.8=1/0.2=5
Refer to the accompanying table in answering the questions that follow: Aggregate Expenditures (Catlg+Xn+G), Billions 420...
Refer to the accompanying table to answer the questions that follow. (1) (2) (3) Real Domestic Output, Billions Aggregate Expenditures (Ca + lg + Xn + G), Billions $520 $500 Possible Levels of Employment, Millions 90 100 110 120 130 550 560 600 650 700 600 640 680 a. If full employment in this economy is 130 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? Inflationary expenditure gap What will be the consequence of this...
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...
The following table shows the initial level of aggregate demand (AD) and te supply (AS) for the economy of Adanac. The full-employment level of output is $500 billion. a. Draw the corresponding initial aggregate demand and aggregate supply curve (AD0 and AS0). b. What is the initial equilibrium price level and level of real GDP? c. At this initial equilibrium (AD0 and AS0), is Adanac experiencing either a recessionary or inflationary gap? If so, how large a gap exists? d. Suppose the aggregate demand in...
Suppose an economy can be represented by the following table, in which employment is in millions of workers and GDP and AE are expressed in billions of dollars: Employment Real GDP 100 105 110 115 120 125 1200 1300 1400 1500 1600 1700 Aggregate Expenditures 1275 1350 1425 1500 1575 1650 Use the table to answer the following: What is the equilibrium level of GDP? size? GDP. What is the multiplier in this economy? below the economy's potential, what is...
The table shows Aggregate Demand and Short-run Aggregate Supply for a country in which Potential GDP is $1,050 billion Price Level Real GDP Demanded Real GDP Supplied 100 $1,150 $1,050 110 $1,100 $1,100 120 $1,050 $1,150 130 $1,000 $1,200 140 $950 $1,250 150 $900 $1,300 160 $850 $1,350 Graph the Aggregate Demand and Short-run Aggregate Supply curves Does this country have an inflationary gap or a recessionary gap? What is the magnitude of the gap as a % of Potential...
Aggregate Market Assignment 1. Update the graph below to show an increase in short run aggregate supply and show what effect this increase in Increase short run aggregate supply will have on price levels and real GDP. Price Tevel SRAS I AD Real GDP 2. Assume that a recessionary gap currently exists. If long-run supply (aka, potential output) increases and there is no change to aggregate demand or short run aggregate supply what happens to real GDP and to the...
Answer the following questions using the aggregate expenditures model of the economy described below. C = 900 + 0.5 Yd T=95 1 = 300 G = 300 X = 350 M = 0.1 Y (a) What are the marginal propensity to consume Number , and the marginal propensity to import Number (b) What is the marginal propensity to save? Number (c) The saving function is: S = Number + Number Yd. (d) What is the value of Ye? Number (e)...
QUESTION 4 With an upward-sloping aggregate supply curve, real output can be increased to the full employment output level if: O A Government expenditures are increased by the amount of the GDP gap. O B. Government expenditures are increased by the amount of the AD shortfall. C. Aggregate demand is increased by the amount of the GDP gap. o D. Govenment expenditures are increased by the amount of the AD shortfall divided by the multiplier QUESTION 5 To eliminate an...
The table gives the aggregate demand schedule, the short run aggregate supply schedule, and the long run aggregate supply schedule for an economy What is the quantity of real GDP at the short-run macroeconomic equilibrium? Price level (GDP deflator) The quantity of real GDP at the short-run macroeconomic equilibrium is s billion 100 Real GDP Real GDP Real GDP supplied supplied demanded in short run in long run (billions of 2007 dollars) 200 500 350 500 500 500 400 650...
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...