Refer to the above table. Suppose investment is $12 billion and the economy revises its saving plans so as to save $4 billion more at all levels of income. The new equilibrium GDP will be: Domestic Output or Income (GDP = DI) $240 250 260 270 280 290 300 310 320 a. $270 billion b. $280 billion O c. $260 billion O d. $290 billion Consumption $244 250 256 262 268 274 280 286 292

Refer to the above table. Suppose investment is $12 billion and the economy revises its saving plans so as to save $4 billion more at all levels of income. The new equilibrium GDP will be: Domestic Output or Income (GDP = DI) $240 250 260 270 280 290 300 310 320 a. $270 billion b. $280 billion O c. $260 billion O d. $290 billion Consumption $244 250 256 262 268 274 280 286 292

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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8. The income-expenditure model Consider a small economy that is closed to trade, so its net exports are equal to zero. Suppose that the economy has the following consumption function, where C is consumption, Y is real GDP, I is investment, G is government purchases, and T stands for net taxes: C = 15+0.75 x (Y-T) Suppose G = $90 billion, 1 = $60 billion, and T = $20 billion. Given the consumption function and the fact that for a closed economy total expenditure can be calculated as Y=C+I+G, the equilibrium output level is equal to 5 billion. Suppose the government purchases are increased by $50 billion. The new equilibrium level of output will be equal to Based on the effect of the change in government purchases on equilibrium output, you can tell that this economy's spending multiplier is equal to
7
Economic
From the following data, determine the equilibrium level of real GDP.The equilibrium level of real GDP is ______________.
None
30
10:35 PM A O 60 Aggregate Expenditures Schedule 50 Tools 40 C+1 Equilibrium 30 20 10 10 20 30 40 50 Real GDP (billions of dollars) Instructions: In part b, enter your answer as a whole number. In part c, round your answer to 1 decimal place. b. What is the equilibrium GDP for this country? billion c. What is the marginal propensity to consume for this country? Aggregate expenditures (billions of dollars)
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