please anwer ponit no:- 4, 3 and 2. (It will be nice if u answer all points) Consider the following planned aggregate expenditure function: AEp=1000+0.8Y1. Calculate the income-expenditure equilibrim real GDP, Y*, for this economy. Illustrate the equilibrium realGDP on a diagram below. Label the equilibrium point E.2. Explain how an increase in uncertainty due to the collapse of multiple banks in the economy affectsconsumption and firm investment spending. Also explain what effect these changes would have on AEp andY*. Show the effect on your diagram in part 1.3. Suppose following the events above consumption and investment spending change by 220. By how muchwould Y* change eventually? Calculate and explain.4. If the federal government wants to get the economy back at producing Y* you found in part 1 by adjusting itspurchases of goods and services (G) by how much would it have to change G? (Hint: use the multiplier tocalculate).

Aggregate expenditure refers to the total amount of spending in an economy over a specified period.…

Consider the following planned aggregate expenditure function: AEp=1000+0.8Y 1. Calculate the income-expenditure equilibrim real GDP, Y*, for this economy. Illustrate the equilibrium real GDP on a diagram below. Label the equilibrium point E.

Consider the following planned aggregate expenditure function: AEp=1000+0.8Y 1. Calculate the income-expenditure equilibrim real GDP, Y*, for this economy. Illustrate the equilibrium real GDP on a diagram below. Label the equilibrium point E.

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

please anwer ponit no:- 4, 3 and 2. (It will be nice if u answer all points)

Consider the following planned aggregate expenditure function: AEp=1000+0.8Y
1. Calculate the income-expenditure equilibrim real GDP, Y*, for this economy. Illustrate the equilibrium real
GDP on a diagram below. Label the equilibrium point E.
2. Explain how an increase in uncertainty due to the collapse of multiple banks in the economy affects
consumption and firm investment spending. Also explain what effect these changes would have on AEp and
Y*. Show the effect on your diagram in part 1.
3. Suppose following the events above consumption and investment spending change by 220. By how much
would Y* change eventually? Calculate and explain.
4. If the federal government wants to get the economy back at producing Y* you found in part 1 by adjusting its
purchases of goods and services (G) by how much would it have to change G? (Hint: use the multiplier to
calculate).

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Step 1: Meaning of Aggregate expenditure

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Step 2: Income-Expenditure Equilibrium and Graph

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Step 3: Effect of change in consumption and investment - Graphical representation

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Step 4: Effect of change in consumption and investment - Numerical representation

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Step 5: Calculation of Change in Government Spending

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