7. Deriving and exploring the total expenditures curve The following graph shows total production (TP) and the level of Natural Real GDP (NRGDP) for a hypothetical economy. When Real GDP is $325 billion, consumption is $275 billion, government purchases are $50 billion, and investment is $25 billion. When Real GDP is $375 billion, consumption is $300 billion, government purchases are $50 billion, and investment is $25 billion. Use the blue line (circle symbol) to plot the economy's total expenditure function within a simplified Keynesian framework. NRGDP 450 425 Xx 400 375 350 O 325 350 TOTAL EXPENDITURE (Billions of dollars) 500 475 325 300 TP 300 O 375 400 425 REAL GDP (Billions of dollars) 450 475 500 TE ?

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7. Deriving and exploring the total expenditures curve
The following graph shows total production (TP) and the level of Natural Real GDP (NRGDP) for a hypothetical economy. When Real GDP is $325
billion, consumption is $275 billion, government purchases are $50 billion, and investment is $25 billion. When Real GDP is $375 billion, consumption
is $300 billion, government purchases are $50 billion, and investment is $25 billion.
Use the blue line (circle symbol) to plot the economy's total expenditure function within a simplified Keynesian framework.
450
425
X
400
375
TOTAL EXPENDITURE (Billions of dollars)
500
475
350
325
300
300
TP
NRGDP
325
350 375 400
425
REAL GDP (Billions of dollars)
450
475
500
TE
?
Transcribed Image Text:7. Deriving and exploring the total expenditures curve The following graph shows total production (TP) and the level of Natural Real GDP (NRGDP) for a hypothetical economy. When Real GDP is $325 billion, consumption is $275 billion, government purchases are $50 billion, and investment is $25 billion. When Real GDP is $375 billion, consumption is $300 billion, government purchases are $50 billion, and investment is $25 billion. Use the blue line (circle symbol) to plot the economy's total expenditure function within a simplified Keynesian framework. 450 425 X 400 375 TOTAL EXPENDITURE (Billions of dollars) 500 475 350 325 300 300 TP NRGDP 325 350 375 400 425 REAL GDP (Billions of dollars) 450 475 500 TE ?
The economy is in equilibrium when Real GDP is
Which of the following did Keynes argue would be needed to move the economy to equilibrium at Natural Real GDP? Check all that apply.
A decrease in government purchases
An increase in government purchases
An increase in investment
. At this point, the economy is also in
A decrease in consumption
Transcribed Image Text:The economy is in equilibrium when Real GDP is Which of the following did Keynes argue would be needed to move the economy to equilibrium at Natural Real GDP? Check all that apply. A decrease in government purchases An increase in government purchases An increase in investment . At this point, the economy is also in A decrease in consumption
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