The following graph plots the planned expenditure line (PE) for an economy in which current equilibrium income is $400 billion and the full- employment income level is $650 billion. The graph also plots a 45 degree line on the same coordinate pair. REALEXPENDITURE (Billions of dollars) 800 700 600 500 400 300 200 100 0 0 100 200 300 400 45-degree line PE PE Full-Employment Income 500 INCOME (Billions of dollars) The economy is experiencing would require a $ 600 700 800 .The absolute value of the income gap is equal to $ billion. Closing the gap billion in government spending. Thus the value of the multiplier for this economy is On the graph, shift the PE line to show the change in the planned expenditure line necessary to close the income gap.
The following graph plots the planned expenditure line (PE) for an economy in which current equilibrium income is $400 billion and the full- employment income level is $650 billion. The graph also plots a 45 degree line on the same coordinate pair. REALEXPENDITURE (Billions of dollars) 800 700 600 500 400 300 200 100 0 0 100 200 300 400 45-degree line PE PE Full-Employment Income 500 INCOME (Billions of dollars) The economy is experiencing would require a $ 600 700 800 .The absolute value of the income gap is equal to $ billion. Closing the gap billion in government spending. Thus the value of the multiplier for this economy is On the graph, shift the PE line to show the change in the planned expenditure line necessary to close the income gap.
Chapter5: Gross Domestic Product
Section: Chapter Questions
Problem 8SQP
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Transcribed Image Text:The following graph plots the planned expenditure line (PE) for an economy in which current equilibrium income is $400 billion and the full-
employment income level is $650 billion. The graph also plots a 45 degree line on the same coordinate pair.
REALEXPENDITURE (Billions of dollars)
800
700
600
500
400
300
200
100
0
0
100
200
300
400
45-degree line
PE
PE
Full-Employment Income
500
INCOME (Billions of dollars)
The economy is experiencing
would require a $
600
700
800
.The absolute value of the income gap is equal to $
billion. Closing the gap
billion
in government spending. Thus the value of the multiplier for this economy is
On the graph, shift the PE line to show the change in the planned expenditure line necessary to close the income gap.
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