4. (Economics Powertool graph paper required) In the Keynesian cross, assume that the consumption function is given by C(Y – T) = 1425 + 0. 72(Y – T') The planned investment function is I(r) 1800 – 130r and government purchases and taxes are both 120. a. Suppose r = 8. Graph the Keynesian cross where Y goes from 0 to 10,000. Be sure to label the axes and the planned expenditure function as PE. b. What is the equilibrium level of income? Show this on your graph as Yo. c. Make a high resolution graph of the Keynsian cross where the Y-axis goes from 7900 to 8000. Be sure to label the axes and the planned expenditure function as PE,.
4. (Economics Powertool graph paper required) In the Keynesian cross, assume that the consumption function is given by C(Y – T) = 1425 + 0. 72(Y – T') The planned investment function is I(r) 1800 – 130r and government purchases and taxes are both 120. a. Suppose r = 8. Graph the Keynesian cross where Y goes from 0 to 10,000. Be sure to label the axes and the planned expenditure function as PE. b. What is the equilibrium level of income? Show this on your graph as Yo. c. Make a high resolution graph of the Keynsian cross where the Y-axis goes from 7900 to 8000. Be sure to label the axes and the planned expenditure function as PE,.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:4. (Economics Powertool graph paper required) In the Keynesian cross, assume that the
consumption function is given by
C(Y – T) =
1425 + 0. 72(Y –T)
The planned investment function is
I(r) =
1800 – 130r
and government purchases and taxes are both 120.
a. Suppose r = 8. Graph the Keynesian cross where Y goes from 0 to 10,000. Be sure to
label the axes and the planned expenditure function as PE,.
b. What is the equilibrium level of income? Show this on your graph as Yo.
c. Make a high resolution graph of the Keynsian cross where the Y-axis goes from 7900
to 8000. Be sure to label the axes and the planned expenditure function as PE.
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 3 images
Recommended textbooks for you
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education