An economy is described as follows: C = 400 + 0.6(Y – T) I p = 200 G = 200 NX = 60 T = 100 Y* = 2,100 a. For the economy described above, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. Instructions: Enter your responses as absolute values. Autonomous expenditure: 800 correct. Multiplier: 2.5 correct. Short-run equilibrium output: 2000 correct. There is a recessionary output gap in the amount of 100 correct.. SOLVE PART (b) b. Illustrate this economy’s short-run equilibrium on a Keynesian cross diagram. Instructions: On the graph below, use the line tool 'PAE' to draw the aggregate expenditure line using the points at Y = 1,500 and Y = 2,500 only. Then use the point tool 'Short-term eq.' to identify the equilibrium level of income and expenditure.
An economy is described as follows:
| C | = 400 + 0.6(Y – T) |
| I p | = 200 |
| G | = 200 |
| NX | = 60 |
| T | = 100 |
| Y* | = 2,100 |
a. For the economy described above, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap.
Instructions: Enter your responses as absolute values.
Autonomous expenditure: 800 correct.
Multiplier: 2.5 correct.
Short-run equilibrium output: 2000 correct.
There is a recessionary output gap in the amount of 100 correct..
SOLVE PART (b)
b. Illustrate this economy’s short-run equilibrium on a Keynesian cross diagram.
Instructions: On the graph below, use the line tool 'PAE' to draw the aggregate expenditure line using the points at Y = 1,500 and Y = 2,500 only. Then use the point tool 'Short-term eq.' to identify the equilibrium level of income and expenditure.
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