A tabular approach to Keynesian equilibrium The following table shows some information on a hypothetical economy. The table lists real GDP, consumption (C), investment (I), government spending (G), net exports (X-M), and aggregate expenditures (AE). In this problem, assume that investment, government spending, and net exports are independent of the economy's real GDP level. Real GDP $400 $500 $600 $700 800 с $225 True $375 O False $525 X- I G M $100 $120 $30 $100 $120 $30 $100 $120 $30 $100 $120 $30 $100 $120 $30 $ $ AE $550 $700 $775 Unplanned Inventory Investment -$75 -$50 -$25 $0 $25 Using the numbers provided in the table, enter the correct numbers in the empty cells. Then, using the dropdown selection menus in the right-most column, indicate whether output will tend to increase, decrease, or remain in equilibrium at each level of real GDP in the table. (Note: The table uses negative numbers to indicate an unplanned inventory investment depletion and positive numbers to indicate an unplanned inventory investment ulation.) Direction of Real GDP and Employment True or False: The most fundamental assumption behind the aggregate expenditures model is that prices in the economy are flexible.

A tabular approach to Keynesian equilibrium The following table shows some information on a hypothetical economy. The table lists real GDP, consumption (C), investment (I), government spending (G), net exports (X-M), and aggregate expenditures (AE). In this problem, assume that investment, government spending, and net exports are independent of the economy's real GDP level. Real GDP $400 $500 $600 $700 800 с $225 True $375 O False $525 X- I G M $100 $120 $30 $100 $120 $30 $100 $120 $30 $100 $120 $30 $100 $120 $30 $ $ AE $550 $700 $775 Unplanned Inventory Investment -$75 -$50 -$25 $0 $25 Using the numbers provided in the table, enter the correct numbers in the empty cells. Then, using the dropdown selection menus in the right-most column, indicate whether output will tend to increase, decrease, or remain in equilibrium at each level of real GDP in the table. (Note: The table uses negative numbers to indicate an unplanned inventory investment depletion and positive numbers to indicate an unplanned inventory investment ulation.) Direction of Real GDP and Employment True or False: The most fundamental assumption behind the aggregate expenditures model is that prices in the economy are flexible.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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