I posted this question earlier and the answer was provided for the first part (image Q2) please complete directives for the second part (image Q2a). Thank you The graph illustrates the loanable funds market equilibrium at an interest rate of 3%. It is used to analyze the effect of increased government purchases on the interest rate by shifting one or both curves.### Graph Explanation:- **Axes**: The x-axis represents the "Quantity of Loanable Funds" in billions of dollars, ranging from 0 to 60. The y-axis represents the "Interest Rate", ranging from 0% to 6%.- **Supply Curve (Orange Line)**: It slopes upwards, indicating a positive correlation between the interest rate and the quantity of loanable funds supplied.- **Demand Curve (Blue Line)**: It slopes downwards, showing an inverse relationship between the interest rate and the quantity of loanable funds demanded.### Textual Description:Suppose that for each one-percentage-point increase in the interest rate, the level of investment spending declines by $1 billion.- The increase in government purchases results in a rise in the interest rate in the money market from 3% to a higher rate, leading to a decrease in the level of investment spending by a specific amount in billions.- After accounting for the multiplier effect, changes in investment spending will cause a change in the quantity of output demanded by a certain amount in billions at each price level.- The impact of increased government purchases on the interest rate and investment spending level is known as the __________ effect.To visualize this:- Place the purple line on the graph to illustrate the aggregate demand curve, labeled AD1. Ensure the final aggregate demand curve (AD1) is parallel to AD0. You can adjust the slopes of AD0 and AD1 by interacting with the graph. Consider a hypothetical economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The following graph shows the economy's initial aggregate demand curve ($AD_1$).Suppose the government **increases** its purchases by $2 billion.After the multiplier effect, the increase in government purchases will cause the quantity of output demanded to ______ by $______ billion at each price level.Place the green line (triangle symbol) on the following graph to show the aggregate demand curve ($AD_2$) after the multiplier effect takes place. Be sure the new aggregate demand curve ($AD_2$) is parallel to $AD_1$. Hover your mouse over the $AD_1$ curve to see its slope.### Graph Description:- **X-axis:** Quantity of Output (Billions of dollars)- **Y-axis:** Price Level- **Initial Aggregate Demand Curve ($AD_1$):** A downward sloping blue line from a price level of 112 at 100 billion dollars of output to a price level of 104 at 130 billion dollars of output.### Additional Elements:- **Legend:** - **$AD_2$:** Green line with triangle symbol - **$AD_3$:** Purple line with diamond symbolThe task is to adjust the $AD_2$ line parallel to $AD_1$ after government spending increases and the multiplier effect is taken into account.

According to the given information, MPC (marginal propensity to consume) is 0.8 and MPS (marginal propensity to save) is 0.2. The government spending multiplier can be calculated as follows: Thus, the value of multiplier (k) is 5.The value of multiplier (K) is 5 and change in government spending (G) is 2 million. The change in the quantity of output demanded can be calculated as follows: Thus, the increase in government spending will increase the quantity of output demanded is $10 billion.When government spending increased by $2 billion the aggregate demand curve will shift to the right by $10 billion at each level of price. It can be illustrated as follows:

Business

Economics

Consider a hypothetical economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The following graph shows the economy's initial aggregate demand curve (AD1). Suppose the government increases its purchases by $2 billion. After the multiplier effect, the increase in government purchases will cause the quantity of output demanded to by billion at each price level. Place the green line (triangle symbol) on the following graph to show the aggregate demand curve (AD2) after the multiplier effect takes place. Be sure the new aggregate demand curve (AD2) is parallel to AD . Hover your mouse over the AD1 curve to see its slope.

Consider a hypothetical economy in which households spend $0.80 of each additional dollar they earn and save the remaining $0.20. The following graph shows the economy's initial aggregate demand curve (AD1). Suppose the government increases its purchases by $2 billion. After the multiplier effect, the increase in government purchases will cause the quantity of output demanded to by billion at each price level. Place the green line (triangle symbol) on the following graph to show the aggregate demand curve (AD2) after the multiplier effect takes place. Be sure the new aggregate demand curve (AD2) is parallel to AD . Hover your mouse over the AD1 curve to see its slope.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

If USD is worth 1.30 CAD does it necessarily mean that they have more purchasing power in Canada (i.e. with the same amount of US dollar can they can buy more goods in Canada than USA?)
A car wheel making company has the following data related to cost: Total Cost = $ 15000 + 1000X and Total Revenue = 2500X, where X is the number of wheel. Plot the Total Cost and Total Revenue on the graph.
CA fiscal year runs from Group of answer choices Oct 1, 2014- Sept 30, 2015 Apr 1, 2014 – Mar 31, 2015 Jan 1, 2014 - Dec 31, 2014 July 1, 2014 – June 30, 2015
Jenkins Ltd manufactures remote control cars which sells for $500 each. The fixed cost is $70000 and the variable cost per unit is $300. Jenkins sold 200 units of car. Find the total cost and total revenue for Jenkins Ltd.
I need the answer to four, but it requires number 3.
[Problem 3 ] Piddling Manufacturing assembles security monitors. It purchases 3,600 black and white cathode ray tubes (CRT's) at $65 each. Ordering costs are $31, and annual carrying costs are 20% of the purchase price. Compute the optimal order quantity.
250 to 300 words Required) If you ask to design an Advertising Campaign for NEW HONDA CITY 6th Generation in which you need to focus towards the Penetration Pricing Strategy in Advertisement then which Message execution style will you follow?
Just question 2.9
Could you specifically explain question (b), such as the process in detail and how you got the correct solution
Describe the various efficiencies that can be applied when we select an analysis period?
Of the fundamental dimensions length, mass, time, and electric charge, which one is the most important in economic analysis? Why?
Find the Value of APC is when APS is 0.78