2. A tabular approach to Keynesian equilibrium The following table shows some information on a hypothetical economy. The table lists real GDP, consumption (C), investment (1), government spending (G), net exports (X-M), and aggregate expenditures (AE). In this problem, assume that investment, government spending, and net exports are independent of the economy's real GDP level. Real GDP $200 $300 $400 $500 $ True с $150 False $270 $390 X- I G M $50 $80 -$40 $50 $80 -$40 $50 $80 $50 $80 -$40 $50 $80 -$40 $ -$40 $ AE $300 $420 $480 Unplanned Inventory Investment -$40 $0 $40 $80 $120 Using the numbers provided in the table, enter the correct numbers in the empty cells. Then, using the dropdown selection menus in the right-most column, indicate whether output will tend to increase, decrease, or remain in equilibrium at each level of real GDP in the table. (Note: The table uses negative numbers to indicate an unplanned inventory investment depletion and positive numbers to indicate an unplanned inventory investment accumulation.) True or False: The most fundamental assumption behind the aggregate expenditures model is that prices in the economy are fixed. Direction of Real GDP and Employment When aggregate expenditures are less than real GDP, there is an unplanned inventory investment employment and production. This will prompt firms to
2. A tabular approach to Keynesian equilibrium The following table shows some information on a hypothetical economy. The table lists real GDP, consumption (C), investment (1), government spending (G), net exports (X-M), and aggregate expenditures (AE). In this problem, assume that investment, government spending, and net exports are independent of the economy's real GDP level. Real GDP $200 $300 $400 $500 $ True с $150 False $270 $390 X- I G M $50 $80 -$40 $50 $80 -$40 $50 $80 $50 $80 -$40 $50 $80 -$40 $ -$40 $ AE $300 $420 $480 Unplanned Inventory Investment -$40 $0 $40 $80 $120 Using the numbers provided in the table, enter the correct numbers in the empty cells. Then, using the dropdown selection menus in the right-most column, indicate whether output will tend to increase, decrease, or remain in equilibrium at each level of real GDP in the table. (Note: The table uses negative numbers to indicate an unplanned inventory investment depletion and positive numbers to indicate an unplanned inventory investment accumulation.) True or False: The most fundamental assumption behind the aggregate expenditures model is that prices in the economy are fixed. Direction of Real GDP and Employment When aggregate expenditures are less than real GDP, there is an unplanned inventory investment employment and production. This will prompt firms to
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
Problem 4TY
Related questions
Question
Only typed answer
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 1 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Macroeconomics: Principles and Policy (MindTap Co…
Economics
ISBN:
9781305280601
Author:
William J. Baumol, Alan S. Blinder
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Macroeconomics: Principles and Policy (MindTap Co…
Economics
ISBN:
9781305280601
Author:
William J. Baumol, Alan S. Blinder
Publisher:
Cengage Learning
Brief Principles of Macroeconomics (MindTap Cours…
Economics
ISBN:
9781337091985
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning