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2. In an economy without government purchases, transfers, or taxes, and without imports or exports, aggregate autonomous consumer spending is $500 billion, planned investment spending is $250 billion, and the marginal propensity to consume is 0.5. a. Write the equation for planned aggregate spending? b. Solve for equilibrium expenditure algebraically? c. What is the value of the multiplier? d. How will Y change if Planned investment decreases to $200 billion? Show diagrammatically?

2. In an economy without government purchases, transfers, or taxes, and without imports or exports, aggregate autonomous consumer spending is $500 billion, planned investment spending is $250 billion, and the marginal propensity to consume is 0.5. a. Write the equation for planned aggregate spending? b. Solve for equilibrium expenditure algebraically? c. What is the value of the multiplier? d. How will Y change if Planned investment decreases to $200 billion? Show diagrammatically?

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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2. In an economy without government purchases, transfers, or taxes, and without imports or exports, aggregate autonomous consumer spending is $500 billion, planned investment spending is $250 billion, and the marginal propensity to consume is 0.5. a. Write the equation for planned aggregate spending? b. Solve for equilibrium expenditure algebraically? c. What is the value of the multiplier? d. How will Y* change if Planned investment decreases to $200 billion? Show diagrammatically?
Transcribed Image Text:2. In an economy without government purchases, transfers, or taxes, and without imports or exports, aggregate autonomous consumer spending is $500 billion, planned investment spending is $250 billion, and the marginal propensity to consume is 0.5. a. Write the equation for planned aggregate spending? b. Solve for equilibrium expenditure algebraically? c. What is the value of the multiplier? d. How will Y* change if Planned investment decreases to $200 billion? Show diagrammatically?
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