Exhibit 8-6 Aggregate expenditures function c. Real consumption and investment expenditures (trillions of dollars per year) $1 trillion. $2 trillion. $3 trillion. e. $6 trillion. d. 32 5 2 1 8 7 21. As shown in Exhibit 8-6, autonomous consumption is: a. 0. b. 8 45 0 1 2 3 4 5 6 7 8 9 Real disposable income (trillions of dollars per year) C+1

Exhibit 8-6 Aggregate expenditures function c. Real consumption and investment expenditures (trillions of dollars per year) $1 trillion. $2 trillion. $3 trillion. e. $6 trillion. d. 32 5 2 1 8 7 21. As shown in Exhibit 8-6, autonomous consumption is: a. 0. b. 8 45 0 1 2 3 4 5 6 7 8 9 Real disposable income (trillions of dollars per year) C+1

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that Equilibrium GDP is $4,000 billion. Potential GDP is $5,000 billion. The marginal propensity to consume is 4/5 (0.8). By how much and in what direction should government purchases be changed? a. increase by $1,000 billion b. increase by $100 billion c. decrease by $1,000 billion d. increase by $200 billion
Homework: Demand-Side Equilibrium: Unemployment or Inflation? The following graph shows the total expenditure line (TE) for an economy where current equilibrium output is $400 billion and potential output is $650 billion. REAL EXPENDITURE (Billions of dollars) § 2 600 500 400 300 200 100 0 0 100 45-degree ling 200 300 400 500 600 REAL GDP (Bilions of dollars) The economy is experiencing TE Potential GDP 700 800 TE equal to $ by billion. Thus, the value of the multiplier for this economy is billion. To close the output gap, government purchases could On the previous graph, shift the TE line to show the change in total expenditure necessary to close the output gap. Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.
Full Employment of National Income 700 1. The Marginal Propensity to Consume (MPC) is: A. 0.50 B. 0.60 |С.0.70 D. 0.75 2. The Multiplier is: A. 2.5 В.3 C. 4 D. 5 3. The Equilibrium level of National Income equals: A. 700 В. 740 C. 780 D. 600 4. The size of the Deflationary or Inflationary is: A. +15 B. -20 C. +40 D.-30 5. If investment spending increases by (6), the Equilibrium level of national income will increase by: A. 10 B. 15 C. 20 D. 24 A Moving to another question will save this response
3 In the definition of marginal propensity to consume, marginal refers to ______.
1) At an output level of $400 billion, there is an unplanned inventory change of All Numbers are in $ Billion Net Taxes 100 100 100 Output Consumption (Income) Spending 200 100 400 600 800 1,000 300 400 500 600 A) positive $100 billion. B) negative $100 billion. C) negative $200 billion. D) zero. 100 100 Investment Government Spending Spending 200 100 200 100 200 100 200 200 100 100
As shown in Exhibit 2, dissaving occurs: Group of answer choices at $5 trillion. between 0 and $4 trillion. where disposable income is greater than $4 trillion. at $8 trillion.
Figure 3 45° line 20 16 12 1.2 4 Disposable income (trillions of 2005 dollars) 8 12 16 20 24 Refer to Figure 3. The marginal propensity to consume equals * 0.80 0.90 0.75 0.85 Consumpfion expenditure (trillions of 20050 dollars}
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From the table below answer the following questions Y C I G AE 0 20 15 25 100 100 15 25 200 180 15 25 300 260 15 25 400 340 15 25 500 420 15 25 1- What is the value of autonomous Consumption? 2- What is the value of new equilibrium if government purchases increase by $100? 3- What is the value of equilibrium consumption? 4- What is the value of autonomous Aggregate Expenditure?
4. Assume a closed economy in which disposable income starts at 1,000 and increases by 500; consumption starts at 1,100 and increases by 300; investment spending is 1,000 and government spending is 500. The MPC is 0.6, The multiplier is 2.5, and The consumption equation is C = 500 + 0.6DI Equilibrium GDP is? A 3,500 B 3,000 C 4,000 D 5,000
2. The consumption function Consider a country with the national income of $12 billion, the amount of taxes paid by households of $3 billion, and household consumption of $7 billion. Suppose that the marginal propensity to consume (MPC) is 0.75. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Hint: You should plot the first point where household consumption equals $7 billion. Then, plot the second point when real disposable income rises by $4 billion. REAL CONSUMPTION (Billions of dollars) 20 18 16 + 14 12 10 0 0 2 4 6 8 10 12 14 16 18 20 REAL DISPOSABLE INCOME (Billions of dollars) -0 O $7.75 billion O $9.75 billion O $7.5 billion O $10.75 billion Consumption Function (?) Suppose now that country's national income increases to $13 billion. Assuming the amount paid in taxes is fixed at $3 billion and MPC= 0.75, what will be the new household consumption?
Refer to the information provided in Table 8.1 .below to answer the questions that follow Table 8.1 Aggregate Income ($ billion) Aggregate Consumption ($billion) 80 50 125 100 170 Q 150 215 200 260 Refer to Table 8.1. Assuming society's MPC is constant at an aggregate of income of $300, aggregate consumption would be :Select one .a. $425 .b. $305 .c. $325 .d. $350