(Figure: Simple Keynesian Model) In the figure, suppose investment has increased from AE =C+lo to AE = C+1.The multiplier equalsAggregate Expenditures (AE)1,2001,1001,0009008007006005004003002001000Incorrect545Y=AEAE=C+4₁₂AE-C+6100 200 300 400 500 600 700 800 900 1,000 1,100 1,200Income (Y)о64787*81446O[ [e[°[_[༩[༨/+-/4011:28 PM11/6/2020Insert22135Abackrolics < Question 7 of 75 >Aggregate I5004003002001001045100 200 300 400 500 600 700 800 900 1,000 1,100 1,200Income (Y)2.5.0.4.0.6.5.Revealed AnswerIncorrectоD9965687RTYU*iE144P0+1141890P4Revealed Answer11811:28 PM11/6/2020InsertDIE SCbackspace

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Answered: (Figure: Simple Keynesian Model) In the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Stiller 1. Suppose an economy is represented by the following equations. Consumption function C = 100 + 0.8Yd Planned investment I = 38 Government spending G = 75 Exports EX = 25 Imports IM= 0.05Yd Autonomous Taxes T = 40 Planned aggregate expenditure AE = C + I + G + (EX - IM) a. By using the above information calculate the equilibrium level of income for this economy, b. Calculate the value of expenditure multiplier. c. Suppose that government spending is increased by 5, what will happen to the equilibrium income level?
Given an economy is currently producing at $1.2T rGDP, natural rGDP is $1.3T, and the MPC is 0.9, then the multiplier for increases in aggregate expenditures is: 10 A (whole number, no decimals). This means the federal government should increase its expenditures by A (whole number) billion dollars.
Assume that marginal propensity to consume (MPC) is 73% and the full employment output (Real GDP) is $500 million. If the current actual Real GDP is at $300 million,. government spending by would bring the economy to full employment Real GDP output. a) increasing; $740,000,000 b) increasing: $135, 135, 135.1, c) decreasing; $ 54,054,054.05 d) increasing: $54,054,054.05
Consider the macroeconomic model shown below: C 150+0.50Y | = 100 G = 100 NX = 25 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. (Round your responses to the nearest dollar.) GDP $375 Aggregate Expenditures (AE) Unplanned Change in Inventories $1,125
The graph below shows a 45°-line (Keynesian cross) diagram. The economy is currently in macroeconomic equilibrium at output level Yo. Suppose that investment increases. 1) Use the line tool to show a possible position for the new aggregate expenditures line. Label this line AE2. Note: if you are not prompted for a label, you have used the wrong drawing tool. 2) Use the point drawing tool to show the new equilibrium levels of GDP and expenditures.Label this point 'B'. Real aggregate expenditures, AE Real GDP, Y Y = AE AE0 Q
If TR increases by 100 and MPC is 0.2, how the Aggregate Expenditure would change (in a simple Keynesian model without money market)? 1)Aggregate expenditure falls by 100 2)Aggregate expenditure increases by 20 3)Aggregate expenditure falls by 20
The multiplier process depicted in the following table is based on an MPC of 0.75. a. Recompute the first four cycles using an MPC of 0.95. MPC = 0.75 MPC = 0.95 Spending Cycles Change in Spending Cumulative Increase Change in Spending Cumulative Increase during Cycle in Spending during Cycle in Spending (billions per year) (billions per year) (billions per year) (billions per year) 1 $100.00 $100.00 $100.00 2 75.00 175.00 56.25 231.25 4 42.18 273.44 b. Given that the MPC is higher, how much more consumption occurs in the first four cycles when the MPC = 0.95 as compared to when the MPC = 0.75? billion c. What is the value of the multiplier (i) if the MPC = 0.75? (ii) if the MPC = 0.95?

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