Suppose the following table shows the components of aggregate expenditure for an economy when disposable income is $250 billion and when it is $500 billion: Real Net Exports (Billions of Dollars) Government Purchases Net Exports Aggregate Expenditure 400 350 On the following graph, use the blue curve to plot investment as a function of disposable income: 300 250 200 150 100 Consumption Investment 50 0 Disposable Income 0 $250 billion $350 billion $200 billion $200 billion $125 billion $875 billion $500 billion $375 billion $200 billion $200 billion $115 billion $890 billion 100 200 300 400 500 600 700 800 900 1000 Real Disposable Income (Billions of Dollars) Investment
Suppose the following table shows the components of aggregate expenditure for an economy when disposable income is $250 billion and when it is $500 billion: Real Net Exports (Billions of Dollars) Government Purchases Net Exports Aggregate Expenditure 400 350 On the following graph, use the blue curve to plot investment as a function of disposable income: 300 250 200 150 100 Consumption Investment 50 0 Disposable Income 0 $250 billion $350 billion $200 billion $200 billion $125 billion $875 billion $500 billion $375 billion $200 billion $200 billion $115 billion $890 billion 100 200 300 400 500 600 700 800 900 1000 Real Disposable Income (Billions of Dollars) Investment
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Suppose the following table shows the components of aggregate expenditure for an economy when disposable income is $250 billion and when it is
$500 billion:
Real Net Exports (Billions of Dollars)
Government Purchases
Net Exports
Aggregate Expenditure
400
350
On the following graph, use the blue curve to plot investment as a function of disposable income:
300
250
200
150
100
Consumption
Investment
50
0
Disposable Income
0
$250 billion
$350 billion
$200 billion
$200 billion
$125 billion
$875 billion
$500 billion
$375 billion
$200 billion
$200 billion
$115 billion
$890 billion
600 700 800 900 1000
100 200 300 400 500
Real Disposable Income (Billions of Dollars)
Investment
?
Transcribed Image Text:According to the table, investment is:
Responsive to changes in disposable income
Determined by bureaucrats
Autonomous with respect to disposable income
Responsive to changes in foreign incomes
A decrease in interest rates would cause the investment function you drew previously to
shift up
shift down
slope upward
slope downward
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