cesb. Initially ADo and ASo are the relevant schedules.The equilibrium price level isand equilibrium real output is $billion.If the price level is 140 then real output is $(Click to select) v in inventories. This pushes the price level (Click to select) ▼billion, real expenditures are $billion, and there is an unintendedIf the price level is 110 then real output is $(Click to select) v in inventories. This pushes the price level (Click to select)billion, real expenditures are $billion, and there is an unintendedc. Now aggregate demand shifts from ADo to AD1 while aggregate supply remains at ASo.Aggregate demand has undergone a(n) (Click to select) v . As a result the equilibrium price level (Click to select) and has a value ofwhile equilibrium real output (Click to select) and has a value of $billion.d. Now aggregate supply shifts from ASo to AS1, while aggregate demand remains at ADO-Aggregate supply has undergone a (Click to select) v. As a result the equilibrium price level (Click to select) and has a value ofwhile equilibrium real output (Click to select) and has a value of $billion.< Prev5 of 16Next >McGrawHillDII吕0000F7F5F6F3F4 The table below shows aggregate demand and aggregate supply schedules in a hypothetical economy, Acadia.Aggregate Demand and Aggregate Supply Schedules for AcadiaReal GDPPADO)(AD1)(ASo)(AS1)Price Level (2012 = 100)(2012 $ billions)140150200230280130170220220270120190240190240110210260160210100230280120170a. Draw a graph showing Acadia's ADO, AD1, ASo and AS1. Using the tools given below plot only the endpoints of the demand curves ADo and AD1. Plotall 5 points for each supply curve, ASo and AS1.cesAggregate Demand and Supplyfor a hypothetical economy, Acadia150Tools140ADOAD1130120ASoAS111010090100150200250300Real GDP (2012 $ billion)Price Level (GDP deflator 2012 = 100)

b. Initially ADo and ASo are the relevant schedules. The equilibrium price level is and equilibrium real output is $ billion. If the price level is 140 then real output is $ (Click to select) v in inventories. This pushes the price level (Click to select) . billion, real expenditures are $ billion, and there is an unintended If the price level is 110 then real output is $ (Click to select) v in inventories. This pushes the price level (Click to select) v. billion, real expenditures are $ billion, and there is an unintended c. Now aggregate demand shifts from ADo to AD, while aggregate supply remains at ASo. Aggregate demand has undergone a(n) (Click to select) ♥. As a result the equilibrium price level (Click to select) and has a value of while equilibrium real output (Click to select) v and has a value of $ billion.

b. Initially ADo and ASo are the relevant schedules. The equilibrium price level is and equilibrium real output is $ billion. If the price level is 140 then real output is $ (Click to select) v in inventories. This pushes the price level (Click to select) . billion, real expenditures are $ billion, and there is an unintended If the price level is 110 then real output is $ (Click to select) v in inventories. This pushes the price level (Click to select) v. billion, real expenditures are $ billion, and there is an unintended c. Now aggregate demand shifts from ADo to AD, while aggregate supply remains at ASo. Aggregate demand has undergone a(n) (Click to select) ♥. As a result the equilibrium price level (Click to select) and has a value of while equilibrium real output (Click to select) v and has a value of $ billion.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. If a simple model of the macro economy is made in which the Marginal Propensity to spend is 0.65, a) What is the multiplier? b) By how much would the equilibrium national income change if autonomous consumption falls by 125?
Consider an economy similar to that in the preceding question in which investment is also $200, government purchases are also $500, net exports are also $30, and the price level is also fixed. But taxes now vary with income and, as a result, the consumption schedule looks like the following: GDP Taxes DI C $1,360 $320 $1,040 $810 1,480 360 1,120 870 1,600 400 1,200 930 1,720 440 1,280 990 1,840 480 1,360 1,050 Find the equilibrium graphically. What is the marginal propensity to consume? What is the tax rate? Use your diagram to show the effect of a decrease of $60 in government purchases. What is the multiplier? Compare this answer to your answer to Test Yourself Question 1. What do you conclude? GDP…
Show what happens to the planned aggregate expenditure curve in each of the following scenarios. Instructions: Drag the PAE curve in the appropriate direction to illustrate the impact of the stated change. a. Government spending increases. Planned Aggregate Expenditure (PAE billions $) PAE = Y PAE1 Aggregate Output or GDP (Y billions $)
25. Which one of the following statements is INCORRECT? A The level of autonomous consumption is determined by the non-income determinants of consumption spending. The impact of a change in one or more of the non-income determinants of consumption can be illustrated by a shift В of the consumption function. The level of autonomous consumption determines the position of the consumption function. Investment spending is the most stable component of aggregate spending in the C economy.
YAS = 742 + 15P – 28 Poit YAD 478 – 45P+ 18G Suppose initially, the Poil = $93 per barrel and government spending is equal to $630. Part (a): Calculate equilibrium GDP and the price level. Part (b): Determine the magnitude of the multiplier if oil prices exogenously rise by $1. Part (c): Using 2 to 3 sentences, provide a theoretical explanation for why the multiplier you calculated in part (b) is smaller (in absolute value) than the simple multiplier. Hint: you should be mentioning how the price level impacts AE and AD variables. Part (d): Determine the magnitude of the multiplier if government spending exogenously increases by $1. Part (e): Using 2 to 3 sentences, provide a theoretical explanation for why the multiplier you calculated in part (d) is smaller than the simple multiplier. Hint: you should be mentioning how the price level impacts AE and AD variables.
Note: I need help with parts d, e, and f only Following is information for the economy of Sparkle. All units are milliondollars. Their autonomous consumption is $700, and the marginal propensity to consume is 0.8.Investment spending is constant at $380, and government expenditure is constant at $300.Exports are constant at $500, and imports are constant at $800. Net taxes are constant at $100.Calculate and state your answers for the following questions.a) What is the value of consumption in this economy when the real GDP is $1100?b) What is the value of autonomous aggregate planned expenditure i.e. AE0?c) What is the value of equilibrium aggregate expenditure for this economy?d) What is the value of unplanned changes in the inventory investment when real GDP is$4000?e) What is the size of the multiplier in this economy?f) If investment spending increases by $50, what would be the value of the change in theequilibrium real GDP?
If national income increases by $20 million and consumption increases by $5 million, the marginal propensity to consume is A) 4. B) 0.75. C) 0.5. D) 0.25.
If the output level is such that the aggregate expenditure line lies below the 45-degree line/Y=AE line, which of the following is true? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. Aggregate expenditure is greater than output, so inventories will decrease and output will a increase. b Aggregate expenditure is less than output, so inventories will increase and output will decrease. C Aggregate expenditure is less than output, so inventories will decrease and output will increase. Aggregate expenditure is greater than output, so inventories will increase and output will d decrease.
Assume that the marginal propensity to consume is 0.75 and that taxes are exogenous. Imagine that government expenditure increases by $10m. Begin by assuming that the interest rate and prices stay fixed. 1. What is the value of the aggregate expenditure multiplier (k)? 2. How would the change be represented in an AD-AS diagram? 3. How would the change differ if the interest rate could change (assuming prices remain fixed)? 4. How would the change differ if the price level could also change?
A drop in the price level will have what effect in the aggregate demand model and the income-expenditure model?A.decreases aggregate demand and planned expenditures.B.increases aggregate demand, but decreases planned expenditures.C.decreases aggregate quantity demanded, but increases planned expenditures.D.increases aggregate quantity demanded and planned expenditures.
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Ab 26 Economics