The economy is in equilibrium when Real GDP isWhich of the following did Keynes argue would be needed to move the economy to equilibrium at Natural Real GDP? Check all that apply.A decrease in consumptionAn increase in government purchasesA decrease in government purchases. At this point, the economy is also inAn increase in investment 7. Deriving and exploring the total expenditures curveThe following graph shows total production (TP) and the level of Natural Real GDP (NRGDP) for a hypothetical economy. When Real GDP is $450billion, consumption is $375 billion, government purchases are $30 billion, and investment is $70 billion. When Real GDP is $500 billion, consumptionis $400 billion, government purchases are $30 billion, and investment is $70 billion.Use the blue line (circle symbol) to plot the economy's total expenditure function within a simplified Keynesian framework.TOTAL EXPENDITURE (Billions of dollars)600575550525500475450425400400TPO425XNRGDPO450475500525REAL GDP (Billions of dollars)550575600TE(?

TE-TP equilibrium: Total expenditure (TE) is equivalent to the aggregate demand (AD) in…

The economy is in equilibrium when Real GDP is Which of the following did Keynes argue would be needed to move the economy to equilibrium at Natural Real GDP? Check all that apply. A decrease in consumption An increase in government purchases A decrease in government purchases At this point, the economy is also in An increase in investment

The economy is in equilibrium when Real GDP is Which of the following did Keynes argue would be needed to move the economy to equilibrium at Natural Real GDP? Check all that apply. A decrease in consumption An increase in government purchases A decrease in government purchases At this point, the economy is also in An increase in investment

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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answer True or false Classical Economists say that:GDP = Consumption + Investment -and-GDP = Consumption + Savings True False
Consider the aggregate expenditure model. Suppose there is an increase in real GDP in the economy. Classify each economic variable as to whether it increases, decreases, or remains unchanged when real GDP increases. Increases Decreases Answer Bank Does not change consumption marginal propensity to consume government spending investment aggregate expenditures net exports imports natural rate of output exports
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Which of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.
"In the classical model, the equilibrium level of real Gross Domestic Product (GDP) is completely supply-determined." Do you agree or disagree? Why?
TRUE/FALSE If aggregate expenditures exceed aggregate income then inventories will rise and firms will eventually lay off workers.
If the aggregate expenditure line shifts in response to a decrease in real wealth, describe the process of moving back to equilibrium.
If the aggregate expenditure line shifts in response to an increase in real wealth, describe the process of moving back to equilibrium.
Keynes stipulated that there are two determinants of investment. They are A,B,C, OR D ONE ANSWER A disposable income and wealth. B expected future profits and interest rates. C price and quantity. D interest rates and labor cost.
An increase in government spending (G) of 15 causes a rise in GDP of 60. Calculate the marginal propensity to consume (MPC). 0.25 0.75 0.35 0.65
The marginal propensity to consume is: the amount of consumption at a specific level of income. the fraction of a change in income that is consumed or spent. a change in saving divided by a change in consumption. consumption times income.