Suppose that at a given price level the following values exist in a hypothetical classical economy. Consumption = $2,000 billion Investment = $900 billion Government Purchases = $700 billion Exports = $200 billion Imports = $300 billion Assume that the level of total expenditures is equal to the value of goods and services that suppliers want to sell. Refer to Exhibit 3-2. If saving increases by $300 billion the new level of consumption will equal investment would According to classical economists, and total expenditures would O $2,300 billion; then decrease by $300 billion; fall by $300 billion $2,300 billion; then increase by $300 billion; fall by $300 billion $1,700 billion; then increase by $300 billion; remain constant $1,700 billion; remain constant; fall by $300 billion
Suppose that at a given price level the following values exist in a hypothetical classical economy. Consumption = $2,000 billion Investment = $900 billion Government Purchases = $700 billion Exports = $200 billion Imports = $300 billion Assume that the level of total expenditures is equal to the value of goods and services that suppliers want to sell. Refer to Exhibit 3-2. If saving increases by $300 billion the new level of consumption will equal investment would According to classical economists, and total expenditures would O $2,300 billion; then decrease by $300 billion; fall by $300 billion $2,300 billion; then increase by $300 billion; fall by $300 billion $1,700 billion; then increase by $300 billion; remain constant $1,700 billion; remain constant; fall by $300 billion
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
Problem 4TY
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Transcribed Image Text:Suppose that at a given price level the following values exist in a hypothetical
classical economy.
Consumption = $2,000 billion
Investment = $900 billion
Government Purchases = $700 billion
Exports = $200 billion
Imports = $300 billion
Assume that the level of total expenditures is equal to the value of goods and
services that suppliers want to sell.
Refer to Exhibit 3-2. If saving increases by $300 billion the new level of
consumption will equal
investment would
According to classical economists,
and total expenditures would
O $2,300 billion; then decrease by $300 billion; fall by $300 billion
$2,300 billion; then increase by $300 billion; fall by $300 billion
$1,700 billion; then increase by $300 billion; remain constant
$1,700 billion; remain constant; fall by $300 billion
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