QUESTION 8Refer to the diagram. If the full-employment level of GDP is B and aggregate expenditures are at AE1, the:AE,thAE,AE,fkABGDPrecessionary expenditure gap is BC.O recessionary expenditure gap is ed.inflationary expenditure gap is BC.inflationary expenditure gap is zero.inflationary expenditure gap is ei.Aggregate Expenditures

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QUESTION 8 Refer to the diagram. If the full-employment level of GDP is B and aggregate expenditures are at AE1, the: AE, AE, AE, e Ik GDP recessionary expenditure gap is BC. recessionary expenditure gap is ed. O inflationary expenditure gap is BC. inflationary expenditure gap is zero. O inflationary expenditure gap is ei. Aggregate Expenditures

QUESTION 8 Refer to the diagram. If the full-employment level of GDP is B and aggregate expenditures are at AE1, the: AE, AE, AE, e Ik GDP recessionary expenditure gap is BC. recessionary expenditure gap is ed. O inflationary expenditure gap is BC. inflationary expenditure gap is zero. O inflationary expenditure gap is ei. Aggregate Expenditures

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter8: Aggregate Demand And The Powerful Consumer

Section: Chapter Questions

Problem 8DQ

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QUESTION 7 Refer to the diagram. If the full-employment level of GDP is B and aggregate expenditures are at AE3, the: AE, AE, AE, e of k GDP O recessionary expenditure gap is BC. O recessionary expenditure gap is ed. O recessionary expenditure gap is AB. inflationary expenditure gap is BC. O inflationary expenditure gap is ed. Aggregate Expenditures
O Macmillan Learning The graph shows the income-expenditure model for the country of Desireland, where AE represents aggregate expenditure. The Desirish government wants to stimulate the economy owing to a slowdown in economic activity and, as such, decides to increase infrastructure spending by $7.65 billion. Show the impact of this extra spending given a marginal propensity to consume (MPC) of 0.7 and a total tax take of 30%, for any changes in GDP. In this example, assume that there is no international trade or inflation, and that interest rates are fixed. Planned aggregate spending (in billions of dollars) 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 0 01- 5 10 15 20 25 30 35 40 45 50 Real GDP (in billions of dollars) 45 degree line A new socialist government is elected to Desireland and decides to increase direct spending even more, to total of $9.7 billion. What will be the total change in real GDP? Please provide the answer to the nearest whole billion. Planned AE 55 60 65 70…
please e
Question E Aggregate expenditures 45 AE₁ AE₂ AES 8. Refer to the above diagram. If the full-employment level of GDP is Band aggregate expenditures are at AE, the OA) A. inflationary expenditure gap is BC. OB) B. recessionary expenditure gap is BC. OC) C. recessionary expenditure gap is ed. OD) D. inflationary expenditure gap is ed.
Multiplier effects occur when there is a change in spending which does not depend on income. Spending which does not depend on income is referred to as O coincident spending. nominal spending. autonomous expenditures.. O induced expenditures.
Multiplier Effect a. During a recessionary gap, is the goal to increase or decrease the equilibrium GDP? Will the change in spending be greater than, less than or equal to the change in the equilibrium GDP? b. c. In a given economy with an MPC of 0.8, the equilibrium GDP equals $630,000. If G increases by $70000, solve for the new equilibrium GDP that will result. In a given economy, with an equilibrium GDP of $280,000 both government purchases and taxes increase by $10,000. Solve for the new equilibrium GDP that will result from these two changes.
K The following equations describe consumption, investment, government spending, taxes, and net exports in the country of Economika. In Economika, equilibrium GDP is equal to $. (Round your asnwer the nearest dollar.) If real GDP in Economika is currently $4,850, which of the following is true? A. There will be an unplanned decrease in inventories, and real GDP will increase next period. OB. There will be an unplanned increase in inventories, and real GDP will increase next period. OC. There will be an unplanned decrease in inventories, and real GDP will decrease next period. O D. There will be an unplanned increase in inventories, and real GDP will decrease next period. OE. There will be no unplanned change in inventories, and real GDP will stay the same next period. C=200+0.80(Y-T) 1=400 G=350 T=350 X = 100
25. Which one of the following statements is INCORRECT? A The level of autonomous consumption is determined by the non-income determinants of consumption spending. The impact of a change in one or more of the non-income determinants of consumption can be illustrated by a shift В of the consumption function. The level of autonomous consumption determines the position of the consumption function. Investment spending is the most stable component of aggregate spending in the C economy.
A fall in mps raises the GDP multiplier. O True O False
Suppose that due ot a fiscal stimulus, there is an increase in disposable incomes of $100 billion in the first round. Then, $33 billion was spent in consumption from this initial change of the disposable incomes. Following the same marginal propensity to consume, how much is the change in consumption spending in the next round from the $33 billion?
THE AGGREGATE EXPENDITURE MODEL (IN THE SHORT RUN)YOU MUST SHOW YOUR CALCULATIONS IN THE SPACE BELOWFOR THE NEXT PROBLEM USE THE FOLLOWING FORMULA:CHANGE IN GDP = [ 1 / (1-MPC) ] * CHANGE IN GInitially, the economy is producing $13 trillion in goods and services and the government is spending $2 trillion.Then the government decides to increase its spending to $2.7 trillion. Compute the new equilibrium level of output. Assume that the marginal propensity to consume is 0.7 (MPC=0.7).
Derive the consumption function and use this relation in the aggregate demand function to derivean equation for the equilibrium in the goods market . Why the AD line is upward sloping?Suppose the government spending falls by 100 and in this case marginal propensity to consumeis 0.8. what is the value of change in output. Draw a diagram to show the shift in AD line due tothis change in government spending and output.