1. Use the following information to fill in the gaps in the table. MPC is constant, and investment, government spending and net taxes are constant at a level of 300, 500 and 200, respectively. Aggregate Planned Real Consump Planned Govern- GDP -tion Invest- ment Net Spending 500 ment Тахes Expenditures 300 200 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1,200 2,000 300 500 200 300 500 200 300 500 200 3,600 3,600 300 500 200 4,400 300 500 200 300 500 200 300 500 200 (a) Complete this table. (b) Calculate MPC and MPS. (c) Determine the equilibrium income level for this economy. (d) If real GDP is 3,000, is unplanned inventory investment positive or negative? Predict how firms will respond. (f) At which output level is saving zero? (g) At which output level is saving equal to investment? (h) If government spending falls by 200, calculate new equilibrium output level.

1. Use the following information to fill in the gaps in the table. MPC is constant, and investment, government spending and net taxes are constant at a level of 300, 500 and 200, respectively. Aggregate Planned Real Consump Planned Govern- GDP -tion Invest- ment Net Spending 500 ment Тахes Expenditures 300 200 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1,200 2,000 300 500 200 300 500 200 300 500 200 3,600 3,600 300 500 200 4,400 300 500 200 300 500 200 300 500 200 (a) Complete this table. (b) Calculate MPC and MPS. (c) Determine the equilibrium income level for this economy. (d) If real GDP is 3,000, is unplanned inventory investment positive or negative? Predict how firms will respond. (f) At which output level is saving zero? (g) At which output level is saving equal to investment? (h) If government spending falls by 200, calculate new equilibrium output level.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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