Real aggregateexpenditure, AE(trillions ofdollars)045°Y = AEAE₁Real GDP, Y(trillions ofdollars)How does the economy adjust if the economy is initially at point ?Inventories have risen above their desired level, and firms increase production.Inventories have risen above their desired level, and firms decrease production.Inventories have fallen below their desired level, and firms increase production.Inventories have fallen below their desired level, and firms decrease production.

The equilibrium occurs where the demand and supply forces are equal. The expenditure is key…

Answered: 0 45° Real GDP, Y (trillions of…

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy

Problem 1TY

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The table given below shows the values of different components of aggregate expenditure of an economy. The marginal propensity to consume (MPC) equals: Table 9.2 (Trillions of Dollars) Real Net Disposable Consumption Saving Planned Government Net Planned GDP Тахes Income (C) (S) Investment Purchases Еxports Aggregate (Y) (NT) (Y – NT) (I) (G) (X -М) Expenditures C+I+G+(X-M) 5.0 1.0 4.0 3.9 0.1 1.0 1.0 -0.7 5.2 5.5 1.0 4.5 4.3 0.2 1.0 1.0 -0.7 5.6 6.0 1.0 5.0 4.7 0.3 1.0 1.0 -0.7 6.0 6.5 1.0 5.5 5.1 0.4 1.0 1.0 -0.7 6.4 7.0 1.0 6.0 5.5 0.5 1.0 1.0 -0.7 6.8 s Navigation Menu b. 0.90 or 9/10. c. 0.60 or 3/5. d. 0.20 or 1/5. e. 0.80 or 4/5.
Disposable Consumption income expenditure (€, thousands) (€, thousands) 200 220 300 300 400 380 500 460 According to the data in the above table, calculate the marginal propensity to consume (MPC). Give only a numerical answer. Where needed, use only a point (.) for decimals (e.g., 3.25, not 3,25) and no thousands separator (e.g., 2000, not 2,000).
a) About Country A, what is your estimate of the country's marginal propensity to consume (MPC) based on the following information on its GDP (Y) and the components thereof (in billion dollars) for two past years? Show calculation. Year 1 Year 2 c) GDP C I 11200 8000 2200 12000 8500 2400 G 800 880 The next few parts are about Country B, whose government plans to cut taxes by $24 billion as a measure to fight the current recession. The marginal propensity to consume (MPC) in Country B is known to be 34. There will be no crowding-out effect. e) NX 200 220 b) What is the initial effect (in billion dollars) of the tax cut on Country B's aggregate demand? (The "initial effect" here refers to the effect on AD after only the first round of increased spending.) What is the total effect of the tax cut on aggregate demand? Explain why it is different from the initial effect. d) How does the total effect of this $24 billion tax cut compare to the total effect of a $24 billion increase in…
Real aggregate expenditure, AE (trillions of 2000 dollars) 0 45° Figure 2-2 N A) government expenditures increase. C) the firm's cash flow rises as profits rise. Y = AE AE₂ AE₁ Real GDP, Y (trillions of 2000 dollars) 17) Refer to Figure 2-2. If the U.S. economy is currently at point N, which of the following could cause it to move to point K? B) corporate taxes increase. D) household wealth rises.
From the information below calculate aggregate demand; Consumption (C) = $200 + 0.6Y Investment (I) = $300 Government (G) = $100 Net Export (NX) = $50 Which one of the following statements about Consumption and Aggregate Demand is CORRECT when the economy achieves equilibrium GDP? a. One is 350 greater than the other b. One comprises the other c. They are valued at $1025 and $1375, respectively d. They are valued at $1375 and $1025, respectively e. They are both the same
When consumers’ expect that future prices will increase, it is expected that current consumption increases, but future consumption decreases. current consumption decreases, but future consumption increases. current consumption increases, and future consumption also increases. current consumption decreases, while future consumption also decreases.
Q1 As per attached file
Suppose that exports increase by $300 billion, given an MPC of.75. Calculate the change in GDP. Give your answer in billions and leave off the dollar sign. Be sure to include a negative sign if appropriate.
In Eiffel Land, the autonomous consumption is 2000, the mpc is 0.6, net taxes are 200, planned investment is 5000, government spending is 2500 and net exports are 300. What is the planned aggregate expenditure of the economy? Question 20 options: 1) 1880 + 0.6Y 2) 9680+0.6Y 3) 9680+0.4Y 4) 9800+0.6Y
An equation for Aggregate Expenditure is: AE = $3600+ 0.8Y, In equilibrium, Income 'Y' = Aggregate Expenditure 'AE'! Solve for Y. Y= $2000
Learning Tasks: 1. Explain the components of the equation C = 50 + 0.65 Yd Assessment: 1. What does the 45-degree line show? 2. What does it mean when the aggregate expenditure line crosses the 45-degree line? In other words, how would you explain the intersection in words?
An economy is currently in equilibrium. The following figures refer to elements in its national income accounts. Elements £ bilions Consumption (total) 70 Investment Government Expenditure 7 Imports 10 Exports 8 Table 2 A) What is the current equilibrium level of income? B) What is the level of injections? What is the level of withdrawals? C) If national income now rises by £12 billion, and as a result, the consumption of domestically produced goods rises to £68 billion. Calculate the marginal propensity to consume (MPC). D) What is the value of the multiplier? E) Comment on the results in part (c) and (d).

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