Consider the aggregate expenditure model. Suppose there is an increase in real GDP in the economy. Classify each economic variable as to whether it increases, decreases, or remains unchanged when real GDP increases. Increases Decreases Answer Bank Does not change consumption marginal propensity to consume government spending investment aggregate expenditures net exports imports natural rate of output exports

Consider the aggregate expenditure model. Suppose there is an increase in real GDP in the economy. Classify each economic variable as to whether it increases, decreases, or remains unchanged when real GDP increases. Increases Decreases Answer Bank Does not change consumption marginal propensity to consume government spending investment aggregate expenditures net exports imports natural rate of output exports

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Problem 1 Suppose the system of aggregate expenditures can be described by the following relationships and parameter values. C(Y – T) = 1200 + 0.8(Y – T) I(r) = 100 – 3r G = 200;T = 200; r = 5; Ex = Im = 0 1. In the consumption function, 1200 represents the portion of consumption that is not dependent on disposable income. Suppose something causes households to become concerned about their economic futures and this autonomous consumption falls to 1100. Find the new equilibrium level of Y (output/income).
In the aggregate expenditures model, all are true except: a)the price level is shown b)the equilibrium level of GDP can be determined c)the relationship between spending and production is presented d)the actual GDP can be compared to potential GDP
Write out and explain the GDP and Aggregate Expenditure identity equations.
Use the Keynesian cross model to predict the impact of an increase in government purchases on equilibrium GDP. State the direction of the change and give a formula for the size of the impact. An increase in taxes shifts the planned expenditure function downward. The change in income is given by AY= ΔΥ= -MPC 1-MPC An increase taxes shifts the planned expenditure function upward. The change in income is given by -MPC 1-MPC AY= XAT An increase in taxes shifts the planned expenditure function inward. The change in income is given by AY= 1 1-MPC XAT 1 1-MPC The direction of the shift is undetermined without knowing the slope of the PE function. The change in income is given by XAT XAT
If the increase in government spending is $500 and the marginal propensity to consume is .75 then the change in real gross domestic domestic product will be ___
Consider the following economy. What is the mpc in this economy? Planned Government Net Exports Aggregate Change in Real GDP (Y) Consumption (C) Investment (I') Purchases (G) (NX) Expenditures (AE) Inventories 10000 8200 800 11000 9000 600 12000 9800 13000 14000 15000 800 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 0.50 b 0.75 C 0.80 d 0.90
The model of national economy is characterised by the following data: Household consumption C-400+0.9 DI Gross investment Ig 200 Government spending G-250 Sum of Taxes T-150 Disposable income DI = Y-T Calculate: a) Equilibrium level of income Y; b) Calculate the value of Marginal propensity to consume and value of Marginal propensity to save; c) Private consumption at macroeconomic equilibrium; d) Develop equation of saving and calculate amount of saving at the point of equilibrium level of income.