Assume the current equilibrium level of income is $200 billion as compared to the full-employment income level of $240 billion and that consumption is the only component of aggregate expenditures that depends upon the level of GDP. If the MPC is 5/8, what change in aggregate expenditures is needed to achieve full employment?

Q: How much would the government have to change spending to close the gap?

A: There is multiplier effect occur in the economy so there is no need to send the same amount of…

Q: The following table shows consumption (C), investment spending (I), and government purchases (G),…

A: Disposable income is the amount of money that households have available for spending and saving…

Q: The economy of a country is characterized by the following equations: Aggregate consumption function…

A: aggregate consumption determines aggregate saving, because saving is defined as the portion of…

Q: If combine the accounting definition E= C+I and the consumption function C=co + cY to give an…

A: The consumption function represents the consumption expenditure in an economy based on its…

Q: In a closed economy, consumers spend $100 regardless of the level of income, and the marginal…

A: GDP measures the value of final goods/ services which are are produced within the borders of a…

Q: Suppose the marginal propensity to consume (MPC) is either 0.75, 0.96, or 0.62.   a. For each…

A: GDP shows total market value that produced within a country in a specific time period .GDP is used…

Q: In a closed economy, consumers spend $300 regardless of the level of income, and the marginal…

A: closed economy can be defined as one of that has no trading activity with outside economies its…

Q: Answer exercises 11-14 on the basis of the following information. Assume that equilibrium real GDP…

A:

Q: What is the level of autonomous consumption for this economy

A: C= 0.86 ( Yd) + $882.28 Now explaining rach and every component of the consumption function  1) Yd…

Q: Why can’t an economy with an MPC greater than 1 reach a stable equilibrium in the aggregate…

A: The marginal propensity to consume refers to the increase in consumption expenditure with an…

Q: Assuming the level of investments is $16 billion and independent of the level of total…

A: The equilibrium levels of output and employment in the private closed economy will be obtained at…

Q: Assume the current equilibrium level of income is $200 billion as compared to the full-employment…

A: Aggregate expenditure (AE) refers to the total amount of spending in an economy over a specific…

Q: If you spend $100 and the MPC is 0.9, how much will total GDP rise because of this spending of  $100…

A: In an economy, any change in spending by the people of a country has the multiplier impact on the…

Q: Assume taxes are zero and an economy has a consumption function of C = 0.68 (Yd) + $237.99.  What is…

A: The marginal propensity to consume (MPC) index measures the proportion of income that is spent on…

Q: Question. Suppose in an economy, autonomous investment (1) is $ 600 crores and the following…

A: Answer:   Hence income i.e I = 600

Q: Suppose that consumption is 70 million and disposable income is 350 and that the economy is…

A: A recessionary GDP gap refers to when natural GDP is higher than actual GDP. This implies actual GDP…

Q: Assume the current equilibrium level of income is $200 billion as compared to the full-employment…

A: The objective of the question is to find out the change in aggregate expenditures needed to achieve…

Q: Suppose that autonomous consumption is 2,190, government purchases are 590, taxes are 0, planned…

A: An autonomous spending depicts the parts of an economy's total use that are not influenced by that…

Q: With an MPC of 0.8, government spending increases $20 billion while taxes decrease $10 billion.…

A: The effect of increase in government spending can be seen as: Multiplier: 11-MPC=11-0.8=5 The…

Q: If the marginal propensity to consume (MPC) equals 0.25 and the government increases spending by…

A: the marginal propensity to consume is a metric that quantifies induced consumption, the concept…

Q: Given that autonomous spending is 100 billion, disposible income is 20 billion, and marginal…

A: C = a + bY Where C= Consumption expenditure in aggregate             a= Autonomous consumption…

Q: Given the national income model Y=C+I+G. C=400+0.72Y; I=100 and G=90 a) Obtain the equilibrium…

A: The national income in a closed economy can be calculated as the sum of consumption spending,…

Q: Calculate autonomous consumption expenditure from the following date about an economy which is In…

A: The economic activities in an economy includes activities by different entities. These are…

Q: Suppose that current income (Y) is 200,000, income in the previous period (Yt-1) is 170,000,…

A: The concept of permanent income relates to the amount of money someone will earn on average over a…

Q: Which of the following government interventions causes the price that buyers pay for the good to…

A: Equilibrium in the goods market occurs where quantity demanded equals quantity supplied

Q: An economy is described by the following equations: C = 1,800+ 0.6 (Y - T) IP = 900 G = 1,500 NX =…

A: The overall amount of spending that is anticipated in an economy, taking into consideration the…

Q: If combine the accounting definition E= C+I and the consumption function C=co + cY to give an…

A: The marginal propensity to consume (MPC) is a measure of how much an individual or a household…

Q: An economy has Aggregate Expenditure Function and Consumption Function given by: AE = 1200+ 0.5Y and…

A: Saving alludes to the demonstration of setting to the side a part of one's income or resources for…

Q: Assume taxes are zero and an economy has a consumption function of C = 0.59 (Yd) + $213.05.  What is…

A: When there are no savings, the income reaches the break-even level. We are aware that savings plus…

Q: Assume taxes are zero and an economy has a consumption function of C = 0.72 (Yd) + $210.49.  What is…

A: In this case, we have to discuss the marginal propensity to save. Marginal propensity to save is…

Q: If the consumption function in an economy as follows C = 50 + 0.75Y and the following variables…

A: Given: Consumption function: C=50+0.75Y

Q: Suppose the MPC = 0.6.  If income increases by $100 billion, by how much would consumption change?…

A: MPC = 0.6 If income increases by $100 billion

Q: In a depressed economy with an MPC of 0.20, what effect will a $200 increase in government spending…

A: Consumption is the sum of autonomous consumption and consumption dependent on income. Disposable…

Q: By how much will consumption change if disposable income in the economy changes by -447?

A: Here  C = 0.81(Yd) + $707.13 here the Yd is the disposable income  0.81 is the marginal propensity…

Q: If the autonomous expenditure by the government increases by 7000 and the MPC is 0.2 find the level…

A:

Q: Suppose an economy has a marginal propensity to consume of 0.66 along with $38,039 consumption…

A: After paying all applicable taxes to the federal, state, and local governments as well as any other…

Q: An economy experiences an MPC of 0.75. Interest rates rise in the economy causing initial change(s)…

A: The multiplier is a measure of how much a change in an initial economic stimulus (such as spending…

Q: If the government decreased its purchases of goods and services by $4,000, and this resulted in an…

A: In a simple macroeconomic model, at equilibrium the aggregate expenditure is equal to income:…

Q: An economy is characterized by the following desired consumption and investment functions: C = 543 +…

A: Note: There are multiple sub parts for the given question, hence we shall answer the first three for…