The following graph shows total production (TP) and the level of Natural Real GDP (NRGDP) for a hypothetical economy. When Real GDP is $325 billion, consumption is $275 billion, government purchases are $50 billion, and investment is $25 billion. When Real GDP is $375 billion, consumption is $300 billion, government purchases are $50 billion, and investment is $25 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) 500 475 450 425 400 375 350 325 300 300 TP NRGDP 325 350 375 400 425 450 475 500 REAL GDP (Billions of dollars) TE The economy is in equilibrium when Real GDP is . At this point, the economy is also in 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 An increase in investment
The following graph shows total production (TP) and the level of Natural Real GDP (NRGDP) for a hypothetical economy. When Real GDP is $325 billion, consumption is $275 billion, government purchases are $50 billion, and investment is $25 billion. When Real GDP is $375 billion, consumption is $300 billion, government purchases are $50 billion, and investment is $25 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) 500 475 450 425 400 375 350 325 300 300 TP NRGDP 325 350 375 400 425 450 475 500 REAL GDP (Billions of dollars) TE The economy is in equilibrium when Real GDP is . At this point, the economy is also in 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 An increase in investment
Chapter9: The Keynesian Model In Action
Section: Chapter Questions
Problem 3SQ
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Transcribed Image Text:The following graph shows total production (TP) and the level of Natural Real GDP (NRGDP) for a hypothetical economy. When Real GDP is $325
billion, consumption is $275 billion, government purchases are $50 billion, and investment is $25 billion. When Real GDP is $375 billion, consumption
is $300 billion, government purchases are $50 billion, and investment is $25 billion.
Use the blue line (circle symbol) to plot the economy's total expenditure function within a simplified Keynesian framework.
TO TAL EXPENDITURE (Billions of dollars)
500
475
450
425
400
375
350
325
300
TP
NRGDP
300
325
350 375 400
425
450
475
500
REAL GDP (Billions of dollars)
TE
The economy is in equilibrium when Real GDP is
At this point, the economy is also in
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
✓ An increase in investment
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