Planned expenditure function question Do all parts to the question (show your work) Assume in Macroland, MPC = 0.8, and autonomous consumption = $2000. Planned investment = $5000, %3D %3D and planned government purchases = $4000. All planned expenditure are autonomous expenditures. Taxes ( T) is = zero, and net exports = zero. а. Write out the consumption function b. What is induced consumption in this model? Write out the planned expenditure function (show your work) d. Calculate equilibrium real current GDP (income) (show your work) С. е. How much is the expenditure multiplier? f. If at the current level of equilibrium, the economy is experiencing an inflationary gap $2000. How much is the full employment GDP? g. How much does planned investment change to close the inflationary gap?
Planned expenditure function question Do all parts to the question (show your work) Assume in Macroland, MPC = 0.8, and autonomous consumption = $2000. Planned investment = $5000, %3D %3D and planned government purchases = $4000. All planned expenditure are autonomous expenditures. Taxes ( T) is = zero, and net exports = zero. а. Write out the consumption function b. What is induced consumption in this model? Write out the planned expenditure function (show your work) d. Calculate equilibrium real current GDP (income) (show your work) С. е. How much is the expenditure multiplier? f. If at the current level of equilibrium, the economy is experiencing an inflationary gap $2000. How much is the full employment GDP? g. How much does planned investment change to close the inflationary gap?
Macroeconomics: Principles and Policy (MindTap Course List)
13th Edition
ISBN:9781305280601
Author:William J. Baumol, Alan S. Blinder
Publisher:William J. Baumol, Alan S. Blinder
Chapter8: Aggregate Demand And The Powerful Consumer
Section: Chapter Questions
Problem 8DQ
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Planned expenditure function question
Do all parts to the question (show your work)
Assume in Macroland, MPC = 0.8, and autonomous consumption = $2000. Planned investment = $5000,
and planned government purchases $4000. All planned expenditure are autonomous expenditures.
%3D
Taxes ( T) is = zero, and net exports zero.
%3D
a.
Write out the consumption function
b. What is induced consumption in this model?
Write out the planned expenditure function (show your work)
d. Calculate equilibrium real current GDP (income) (show your work)
e.
How much is the expenditure multiplier?
f. If at the current level of equilibrium, the economy is experiencing an inflationary gap $2000.
nɔ
How much is the full employment GDP?
How much does planned investment change to close the inflationary gap?
h. Graph the planned expenditure function. Show the change (shift) for a change in investment to
close the gap. Show equilibrium points, full-employment GDP. Label all points clearl
114
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6.
E.
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Transcribed Image Text:Σ
00
Planned expenditure function question
Do all parts to the question (show your work)
Assume in Macroland, MPC = 0.8, and autonomous consumption = $2000. Planned investment = $5000,
and planned government purchases $4000. All planned expenditure are autonomous expenditures.
%3D
Taxes ( T) is = zero, and net exports zero.
%3D
a.
Write out the consumption function
b. What is induced consumption in this model?
Write out the planned expenditure function (show your work)
d. Calculate equilibrium real current GDP (income) (show your work)
e.
How much is the expenditure multiplier?
f. If at the current level of equilibrium, the economy is experiencing an inflationary gap $2000.
nɔ
How much is the full employment GDP?
How much does planned investment change to close the inflationary gap?
h. Graph the planned expenditure function. Show the change (shift) for a change in investment to
close the gap. Show equilibrium points, full-employment GDP. Label all points clearl
114
F4
home
pua
F12
prt sc
inse
F2
F3
F5
F6
F7
F8
F10
F11
#3
4.
9.
6.
E.
B.
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