Keynesian CrossPlannedexpenditure, PEPEPEPEPEX₁ Y₂Show Transcribed TextOptions:a) Rise: Increaseb) rise; decreasec) fall; increased) fall; decreaseY;Actual expenditurePlanned expenditureIn this graph, if firms are producing at level Y3, then inventorieswillinducing firms to_production.Income, output Y

Actual expenditure is the amount spent actually while production while planned expenditure is the…

In this graph, if firms are producing at level Y3, then inventories will, inducing firms to __.__production. Show Transcribed Text Options: a) Rise: Increase b) rise; decrease =) fall; increase d) fall; decrease

In this graph, if firms are producing at level Y3, then inventories will, inducing firms to .production. Show Transcribed Text Options: a) Rise: Increase b) rise; decrease =) fall; increase d) fall; decrease

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The Greek letter a represents a number that determines how much output responds to unexpected changes in the price level. In this case, assume that a = $2 billion. That is, when the actual price level exceeds the expected price level by 1, the quantity of output supplied will exceed the natural level of output by $2 billion. Suppose the natural level of output is $50 billion of real GDP and that people expect a price level of 95. On the following graph, use the purple line (diamond symbol) to plot this economy's long-run aggregate supply (LRAS) curve. Then use the orange line segments (square symbol) to plot the economy's short-run aggregate supply (AS) curve at each of the following price levels: 85, 90, 95, 100, and 105. PRICE LEVEL 125 120 115 110 105 100 95 90 85 80 75 0 + 10 20 ¶¶ 30 40 50 60 70 OUTPUT (Billions of dollars) + 80 90 100 -O AS LRAS (?) The short-run quantity of output supplied by firms will rise above the natural level of output when the actual price level falls…
Now assume you are examining a new economy. You learn that the mpc of this new economy is 0.75 and that the government wants to increase the level of output by $3000. What change in G achieves this desired change in Y? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a $750 b $1500 $3000 d $12000
Which of the following states is equivalent to saying that we are in a short-run equilibrium? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a There is no unplanned changes in inventories. b Investment (I) is equal to Planned Investment Spending (Ip). Income is equal to aggregate expenditures. d All of the above.
The graph below shows the consumption schedule for Zamunda. Research has yielded the following information about Zamunda: At the current interest rate, gross investment (1) is $500, government purchases (G) are $800, exports are $400, and imports are $200. Instructions: In part a, enter your answer as a whole number. In part c, round your answers to one decimal place. a. By supplementing the consumption schedule in the graph below to include the expenditures for gross investment (1), government purchases (G), and net exports (NX) stated above, what is the new value of the vertical intercept? b. In the graph below, create an aggregate expenditures schedule by including the expenditures for gross investment (I), government purchases (G), and net exports (NX), and indicate the new equilibrium level of real GDP for the complete aggregate expenditures schedule.
An increase in consumer spending causes the ["", ""] curve to shift to the ["", ""] .
4. The investment demand curve The following table shows the expected rate of profit and the cumulative amount of investment with that rate of profit or higher in a hypothetical economy. For example, $100 billion worth of investment projects have an expected rate of profit that is greater than or equal to 8%. Put another way, at an interest rate of 8%, the amount of investment demanded equals $100 billion. Expected Rate of Profit Cumulative Investment at this Rate of Profit or Higher (Percent) (Billions of Dollars) 75 INTEREST RATE (Percent) 16 15 14 13 12 + 11 10 2 0 Using the blue points (circle symbol), plot the hypothetical economy's investment demand curve (1) on the graph. Line segments will automatically connect the points. H+++ 10 0 8 6 4 100 25 125 150 50 75 100 126 150 175 200 REAL INVESTMENT (Billions of dollars) Investment Function Determine how each of the following events will shift the investment demand (1) curve. ?
If the supply of petroleum were reduced by petroleum firms due to rising inventories, we can expect what?
Use the initial settings (or any other non-zero value) for the Change in Autonomous Spending and MPC. Click the "Spending Rounds" button at the top of the Settings window. Which of the following describes how the Change in Spending value in each row is related to the Disposable Income value in the same row? O In each row, Change in Spending is Disposable Income minus MPC*(Change in Autonomous Spending). Change in Spending in each row is MPC x Disposable Income for that row. O Change in Spending is always half of Disposable Income. O Change in Spending is Disposable Income times the spending multiplier.
If the output level is such that the Y=AE line (45-degree line) is below the aggregate expenditure line, which of the following is true? a Aggregate expenditure is greater than output, so inventories will decrease and output will increase. b Aggregate expenditure is less than output, so inventories will increase and output will decrease. c Aggregate expenditure is less than output, so inventories will decrease and output will increase. d Aggregate expenditure is greater than output, so inventories will increase and output will decrease.
the question is true or false: "An increase in business investment spending has the same effect on the level of ad as an increase in the same amount of government spending" can you explain what the answer is? Would they equal each other out?
Question 2 Refer to the information provided in Figure 23.9 below to answer the question(s) that follow. Aggregate expenditures ($ millions) 225 200 175 150 45° AE 100 200 300 Aggregate output ($ millions) Figure 23.9 a) Refer to Figure 23.9. Write the equation for the aggregate expenditure function (AE). Show your work. b) Refer to Figure 23.9. What is the equilibrium level of output in this economy? State the equilibrium condition used to determine this. c) Explain the forces that maintain/drive the economy to this equilibrium by considering what will happen at the following two levels of output, $300 million and $100 million. You will need to discuss changes in investment through unplanned inventories and the response of output. d) Refer to Figure 23.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million? e)The interest rate is an exogenous factor that effects the level of investment in an economy.…
Answer all four questions based on the following diagram. 1. Calculate the MPC in the above diagram. 2. Based on Diagram 1, If private Investment of $100 is added to the existing C, calculate the new equilibrium level of NI. 3. Given your answer to the previous question (question #2) calculate by how much G should change, if the full employment level in the economy is at $3000. 4. Based on the answer to the previous question (question #3), if half of those government expenditures are financed through lump sum taxes, calculate the new level if NI? (C+I+G)