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600 600 500 150 650 -50 700 700 575 150 725 -25 800 800 650 150 800 900 900 725 150 875 25 1,000 1,000 800 150 950 50 1,100 1,100 875 150 1,025 75 1,200 1,200 950 150 1,100 100 f. Suppose that planned investment increased to $250. Write out the new planned Aggregate Expenditure function. g. What is the value of the multiplier in Arcadia? (Note: you are being asked to provide a numerical answer) h. What is the new income-expenditure equilibrium real GDP? (Noté: in addition to providing a numerical answer, you must show your work. You may use either a table or algebra to arrive at your answer. If you want to use a table, you may use Table 1 below. If you use the table, you do not need to fill in all of the blank cells. You may just fill in enough cells to help you arrive at your answer.) ITYPE YOUR ANSWER BELOW (AND FILL IN TABLE 1 BELOW IF YOU ARE USING THE TABLE TO SUPPORT YOUR ANSWER. IF YOU ARE USING ALGEBRA TO ANSWER THE QUESTION YOU CAN JUST SHOW YOUR WORK BELOW AND YOU DO NOT NEED TO ALSO FILL IN THE TABLE).]

600 600 500 150 650 -50 700 700 575 150 725 -25 800 800 650 150 800 900 900 725 150 875 25 1,000 1,000 800 150 950 50 1,100 1,100 875 150 1,025 75 1,200 1,200 950 150 1,100 100 f. Suppose that planned investment increased to $250. Write out the new planned Aggregate Expenditure function. g. What is the value of the multiplier in Arcadia? (Note: you are being asked to provide a numerical answer) h. What is the new income-expenditure equilibrium real GDP? (Noté: in addition to providing a numerical answer, you must show your work. You may use either a table or algebra to arrive at your answer. If you want to use a table, you may use Table 1 below. If you use the table, you do not need to fill in all of the blank cells. You may just fill in enough cells to help you arrive at your answer.) ITYPE YOUR ANSWER BELOW (AND FILL IN TABLE 1 BELOW IF YOU ARE USING THE TABLE TO SUPPORT YOUR ANSWER. IF YOU ARE USING ALGEBRA TO ANSWER THE QUESTION YOU CAN JUST SHOW YOUR WORK BELOW AND YOU DO NOT NEED TO ALSO FILL IN THE TABLE).]

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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I just need help on f g and h 

84%v ew Zoom Add Page Insert Table Chart Text Shape Media Comment Collaborate In the country of Arcadia, the mìnimum amount of consumption spending that will occur in a given year is $50- that is, no matter what level of income households have, the aggregate amount of consumption spending in the economy will be at least $50. In addition, for every extra dollar of national income, consumption spending will increase by $0.75. (Note: For the entirety of this problem, assume that Taxes = transfers = 0, and the aggregate price level in Arcadia is fixed.) a. What is the marginal propensity to consume in Arcadia? 600 600 500 150 650 -50 700 700 575 150 725 -25 800 800 650 150 800 %3D 900 900 725 150 875 25 1,000 1,000 800 150 950 50 The marginal propensity to consume in Arcadia is 0.75 1,100 1,100 875 150 1,025 75 b. Write out the consumption function for the Arcadian economy. 1,200 1,200 950 150 1,100 100 C= 50 + 0.75Y In 2019 in Arcadia, planned investment expenditure was $150, there was no government spending or taxation or government transfers and no exports or imports. f. Suppose that planned investment increased to $250. Write out the new planned Aggregate Expenditure function. c. Write out the planned Aggregate Expenditure function for Arcadia. g. What is the value of the multiplier in Arcadia? (Note: you are being asked to provide a numerical answer) AE= 200 + 0.75 d If real GDP (i.e. value of all production in the Arcadian economy) in 2019 were $600, what would be the level of planned Aggregate Expenditure? Would production be exactly equal to expenditure, or would suppliers have to reduce or increase inventories? If you've answered that suppliers would have to reduce or increase inventories, specify the amount of the change and be sure to indicate whether it is an increase or a decrease. h. What is the new income-expenditure equilibrium real GDP? (Noté: in addition to providing a numerical answer, you must show your work. You may use either a table or algebra to arrive at your answer. If you want to use a table, you may use Table 1 below. If you use the table, you do not need to fill in all of the blank cells. You may just fill in Planned Expenditure: AE= $650 Therefore, the aggregate expenditure is not equal to the production , as the production is only $600. So, there is need to increase inventories of $50 enough cells to help you arrive at your answer.) ĮTYPE YOUR ANSWER BELOW (AND FILL IN TABLE 1 BELOW IF YOU ARE USING THE TABLE TO SUPPORT YOUR ANSWER. IF YOU ARE USING ALGEBRA TO ANSWER THE QUESTION YOU CAN JUST SHOW YOUR WORK BELOW AND YOU DO NOT NEED TO ALSO FILL IN THE TABLE).1 e. What was the income-expenditure equilibrium level of real GDP in Arcadia in 2019? Support your answer by filling in all of the blank cells in the table below. (Note: you need to provide a numerical answer for the income-expenditure equilibrium level of GDP in Arcadia in 2019 AND fill in the table below) C= 50 + 0.75y Table 1. For (optional) use with Problem 1 part (h) I=150 AE= 200 +0.75Y Planned Disposable Income Planned Aggregate Expenditure (AEp) Unplanned Consumption Investment (C) Investment Real GDP (YD) (,) (L) Planned Disposable Aggregate Expenditure (AE,) Planned Unplanned Investment Consumption Investment (C) Income Real GDP (Yp) (I,) (IL) 500 500 425 150 575 -75 Page 1 of 3 Page 2 of 3
Transcribed Image Text:84%v ew Zoom Add Page Insert Table Chart Text Shape Media Comment Collaborate In the country of Arcadia, the mìnimum amount of consumption spending that will occur in a given year is $50- that is, no matter what level of income households have, the aggregate amount of consumption spending in the economy will be at least $50. In addition, for every extra dollar of national income, consumption spending will increase by $0.75. (Note: For the entirety of this problem, assume that Taxes = transfers = 0, and the aggregate price level in Arcadia is fixed.) a. What is the marginal propensity to consume in Arcadia? 600 600 500 150 650 -50 700 700 575 150 725 -25 800 800 650 150 800 %3D 900 900 725 150 875 25 1,000 1,000 800 150 950 50 The marginal propensity to consume in Arcadia is 0.75 1,100 1,100 875 150 1,025 75 b. Write out the consumption function for the Arcadian economy. 1,200 1,200 950 150 1,100 100 C= 50 + 0.75Y In 2019 in Arcadia, planned investment expenditure was $150, there was no government spending or taxation or government transfers and no exports or imports. f. Suppose that planned investment increased to $250. Write out the new planned Aggregate Expenditure function. c. Write out the planned Aggregate Expenditure function for Arcadia. g. What is the value of the multiplier in Arcadia? (Note: you are being asked to provide a numerical answer) AE= 200 + 0.75 d If real GDP (i.e. value of all production in the Arcadian economy) in 2019 were $600, what would be the level of planned Aggregate Expenditure? Would production be exactly equal to expenditure, or would suppliers have to reduce or increase inventories? If you've answered that suppliers would have to reduce or increase inventories, specify the amount of the change and be sure to indicate whether it is an increase or a decrease. h. What is the new income-expenditure equilibrium real GDP? (Noté: in addition to providing a numerical answer, you must show your work. You may use either a table or algebra to arrive at your answer. If you want to use a table, you may use Table 1 below. If you use the table, you do not need to fill in all of the blank cells. You may just fill in Planned Expenditure: AE= $650 Therefore, the aggregate expenditure is not equal to the production , as the production is only $600. So, there is need to increase inventories of $50 enough cells to help you arrive at your answer.) ĮTYPE YOUR ANSWER BELOW (AND FILL IN TABLE 1 BELOW IF YOU ARE USING THE TABLE TO SUPPORT YOUR ANSWER. IF YOU ARE USING ALGEBRA TO ANSWER THE QUESTION YOU CAN JUST SHOW YOUR WORK BELOW AND YOU DO NOT NEED TO ALSO FILL IN THE TABLE).1 e. What was the income-expenditure equilibrium level of real GDP in Arcadia in 2019? Support your answer by filling in all of the blank cells in the table below. (Note: you need to provide a numerical answer for the income-expenditure equilibrium level of GDP in Arcadia in 2019 AND fill in the table below) C= 50 + 0.75y Table 1. For (optional) use with Problem 1 part (h) I=150 AE= 200 +0.75Y Planned Disposable Income Planned Aggregate Expenditure (AEp) Unplanned Consumption Investment (C) Investment Real GDP (YD) (,) (L) Planned Disposable Aggregate Expenditure (AE,) Planned Unplanned Investment Consumption Investment (C) Income Real GDP (Yp) (I,) (IL) 500 500 425 150 575 -75 Page 1 of 3 Page 2 of 3
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