Assume that Bongoliers consume 80 percent of their disposable incomes and save 20 percent. You are asked by the business editor of the Bongo Tribune to predict the events of the next few months. By using the data given and assuming that investment is constant, if the government of Bongo makes no changes, you prediet that income w fall, since aggregate expenditure is less than output/income If no changes are made, the economy of Bongo will settle at a level of GDP of billion Bongos. (Enter your response as an integer.)

Assume that Bongoliers consume 80 percent of their disposable incomes and save 20 percent. You are asked by the business editor of the Bongo Tribune to predict the events of the next few months. By using the data given and assuming that investment is constant, if the government of Bongo makes no changes, you prediet that income w fall, since aggregate expenditure is less than output/income If no changes are made, the economy of Bongo will settle at a level of GDP of billion Bongos. (Enter your response as an integer.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Aggregate Expenditures and Multipliers Assignment a. Using the aggregate expenditure function above, what is the current level of real GDP? b. Using the aggregate expenditure function above, what would be the level of real GDP if the aggregate expenditure function shifted up by $0.2T? c. If Investment expenditures increase by $300B and MPC is equal to 0.90, what will be the increase in real GDP? d. If Government expenditures increase by $800B and MPS is equal to 0.05, what will be the increase in real GDP?
We again assume asimple closed economy with GDP of 100 and:c0(autonomous consumption) = 20c1 (marginal propensity to consume) = 0.6I (investment) = 20.a) Now assume that c0falls by 5 (i.e. 5% of GDP), i.e. for any given level of output,consumption will fall by 5. Show the implied fall in the AD function in yourdiagram and show that output will fall by more than 5.b) Show that the multiplier is equal to 2.5, and hence that, in the new equilibrium,output will have fallen by 12.5 (i.e. by 12.5%)c) How big would the impact be if, say, c1 = 0.4 or c1 = 0.8? Explain the difference.
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