The aggregate expenditures of the hypothetical country shown includes $2 billion in investment expenditures, $3 billion in government expenditures, and $1 billion in exports. At a real GDP of $18 billion, consumption expenditures less imports equal $12 billion and imports equal $2 billion. Use this information to graph the aggregate expenditures (AE) function. Assume autonomous consumption and autonomous imports are $0. Aggregate planned expenditures (in billions of $) 20 18 16 14 12 10 8 6 20 0 0 2 e 4 6 8 10 12 14 Real GDP (in billions of $) 45 degree line 16 AE 18 20

The aggregate expenditures of the hypothetical country shown includes $2 billion in investment expenditures, $3 billion in government expenditures, and $1 billion in exports. At a real GDP of $18 billion, consumption expenditures less imports equal $12 billion and imports equal $2 billion. Use this information to graph the aggregate expenditures (AE) function. Assume autonomous consumption and autonomous imports are $0. Aggregate planned expenditures (in billions of $) 20 18 16 14 12 10 8 6 20 0 0 2 e 4 6 8 10 12 14 Real GDP (in billions of $) 45 degree line 16 AE 18 20

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume aggregate consumer spending equals $1,500 when aggregate disposable income is zero, and when disposable income increases from $0 to $1,000, consumer spending increases by $650. What is the equation for the aggregate consumption function? C = 1,500YD + 650 C= 0.65YD + 1,500 C = 650YD + 1,500 O C= 0.75YD+ 1,000
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11:04 AM ECON 122 CAT ONE.docX Phoenix Files QUESTION ONE Is it desirable for a country to have a large gross domestic product? Explain (2 marks) QUESTION TWO You are given data on the following variables in an economy Government spending 300 Planned investment Net exports Autonomous taxes Income tax rate Marginal propensity to consume 0.5 a) Consumption (C) is 600 when income (Y) is equal to 1500. Solve for autonom ous consumption (2 ma rks) ii) 200 S 50 b) Solve for the equilibrium level of output in the following two scenarios: i) There is an income tax t=0.1, Edit 0.1 250 Q Search © | 46| 472 [ 66 c) In the economy with an income tax of 10%, what is the budget balance of the government? (2 marks) O X: × There is no income tax in the economy. Denote these two variables by Yw and YN respectively. (4 marks) d) Solve for the change in net exports that would bring the equilibrium output lev el in the economy with the income tax to the level of YN that you found in part b. specify both…
Calculate the value of consumption expenditure from the following:- National income = $6000 Autonomous consumption = $1000 Marginal propensity to consume = 0.80
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If the output level is such that the Y=AE line (45-degree line) is below the aggregate expenditure line, which of the following is true? a Aggregate expenditure is greater than output, so inventories will decrease and output will increase. b Aggregate expenditure is less than output, so inventories will increase and output will decrease. c Aggregate expenditure is less than output, so inventories will decrease and output will increase. d Aggregate expenditure is greater than output, so inventories will increase and output will decrease.
Real aggregate expenditure, AE (trillions of dollars) 0 45° Y=AE AE Real GDP, Y (trillions of dollars) Refer to Figure 23-1. If the economy is at point L, what will happen? Inventories have fallen below their desired level, and firms decrease production. Inventories have risen above their desired level, and firms decrease production. Inventories have fallen below their desired level, and firms increase production. Inventories have risen above their desired level, and firms increase production.
Fill in the table below to answer the next five questions. Assume that l", G and NX are fixed. Consumption Planned Government Net Exports Aggregate Change in Real GDP (Y) (C) Investment (Ip) Expenditures (G) (NX) Expenditures (AE) Inventories 10000 11000 550 12000 1000 13000 10520 14000 11320 15000 12120 730 The full-employment level of output is $3000 above the current level of output. How much should the government change government expenditures in order for the new equilibrium to be equal to the full- employment level of output? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a -600 b 600 3000 d -3000
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Consider a closed economy with a gross domestic product (Y) of 800, consumption expenditure (C) of 500, government expenditure (G) of 100 and tax revenues (T) of 190. The figures are in billions of dollars. Suppose the investment expenditure function is I = 300 – 50r, where r is the real interest rate expressed as a percentage. a) State the equation between Y and the three components of expenditure. b) Calculate private saving (Sp), public saving (Sg), and national saving (S). c) Calculate investment (I). d) Calculate the equilibrium real interest rate and quantity of loanable funds. e) If the government ran a budget deficit of $30 billion in the next period, explain how this would affect the market for loanable funds.
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15. Total expenditures in a country (in billions of dollars) are increasing at a rate of f(x) = 8.22x+87.13, where x = 0 corresponds to the year 2000. Total expenditures were $1584.9 billion in 2002. a. Find a function that gives the total expenditures x years after 2000. b. What will total expenditures be in 2016? a. What is the function for the total expenditures? F(x)= (Simplify your answer. Use integers or decimals for any numbers in the expression.) b. In 2016, total expenditures will be S (Type an integer or a decimal.) billion.