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6. Aggregate expenditure and income Suppose the following table shows consumption (C), investment (I), government purchases (G), and net exports (NX) in a hypothetical economy for various levels of real GDP. Assume that the price level remains unchanged at all levels of real GDP. Real GDP (Billions of dollars) с 1 G NX (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 500 250 250 200 -150 600 325 250 200 -150 700 400 250 200 -150 800 475 250 200 -150 900 550 250 200 -150 The following graph shows real GDP on the horizontal axis and aggregate expenditure on the vertical axis. Use the orange line (square symbol) to plot a 45-degree line on this graph. Then use the blue points (circle symbols) to plot the aggregate expenditure line for this economy. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. AGGREGATE EXPENDITURES (Billions of dollars) 1000 900 800 700 600 500 400 400 500 600 700 800 REAL GDP (Billions of dollars) 900 1000 45-Degree Line AE Line + Equilibrium Output ? On the previous graph, use the black point (plus symbol) to indicate the equilibrium output at this price level. Note: Dashed drop lines will automatically extend to both axes. Suppose real GDP is currently $500 billion. Assuming that the price level remains constant, this would mean that , which would send a signal to firms to

6. Aggregate expenditure and income Suppose the following table shows consumption (C), investment (I), government purchases (G), and net exports (NX) in a hypothetical economy for various levels of real GDP. Assume that the price level remains unchanged at all levels of real GDP. Real GDP (Billions of dollars) с 1 G NX (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 500 250 250 200 -150 600 325 250 200 -150 700 400 250 200 -150 800 475 250 200 -150 900 550 250 200 -150 The following graph shows real GDP on the horizontal axis and aggregate expenditure on the vertical axis. Use the orange line (square symbol) to plot a 45-degree line on this graph. Then use the blue points (circle symbols) to plot the aggregate expenditure line for this economy. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. AGGREGATE EXPENDITURES (Billions of dollars) 1000 900 800 700 600 500 400 400 500 600 700 800 REAL GDP (Billions of dollars) 900 1000 45-Degree Line AE Line + Equilibrium Output ? On the previous graph, use the black point (plus symbol) to indicate the equilibrium output at this price level. Note: Dashed drop lines will automatically extend to both axes. Suppose real GDP is currently $500 billion. Assuming that the price level remains constant, this would mean that , which would send a signal to firms to

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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6. Aggregate expenditure and income Suppose the following table shows consumption (C), investment (I), government purchases (G), and net exports (NX) in a hypothetical economy for various levels of real GDP. Assume that the price level remains unchanged at all levels of real GDP. Real GDP с G NX (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 500 250 250 200 -150 600 325 250 200 -150 700 400 250 200 -150 800 475 250 200 -150 900 550 250 200 -150 The following graph shows real GDP on the horizontal axis and aggregate expenditure on the vertical axis. Use the orange line (square symbol) to plot a 45-degree line on this graph. Then use the blue points (circle symbols) to plot the aggregate expenditure line for this economy. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. AGGREGATE EXPENDITURES (Billions of dollars) 1000 900 800 700 600 500 400 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars) 45-Degree Line AE Line + Equilibrium Output (?) On the previous graph, use the black point (plus symbol) to indicate the equilibrium output at this price level. Note: Dashed drop lines will automatically extend to both axes. Suppose real GDP is currently $500 billion. Assuming that the price level remains constant, this would mean that , which would send a signal to firms to
Transcribed Image Text:6. Aggregate expenditure and income Suppose the following table shows consumption (C), investment (I), government purchases (G), and net exports (NX) in a hypothetical economy for various levels of real GDP. Assume that the price level remains unchanged at all levels of real GDP. Real GDP с G NX (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 500 250 250 200 -150 600 325 250 200 -150 700 400 250 200 -150 800 475 250 200 -150 900 550 250 200 -150 The following graph shows real GDP on the horizontal axis and aggregate expenditure on the vertical axis. Use the orange line (square symbol) to plot a 45-degree line on this graph. Then use the blue points (circle symbols) to plot the aggregate expenditure line for this economy. Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. AGGREGATE EXPENDITURES (Billions of dollars) 1000 900 800 700 600 500 400 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars) 45-Degree Line AE Line + Equilibrium Output (?) On the previous graph, use the black point (plus symbol) to indicate the equilibrium output at this price level. Note: Dashed drop lines will automatically extend to both axes. Suppose real GDP is currently $500 billion. Assuming that the price level remains constant, this would mean that , which would send a signal to firms to
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