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The following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $100 billion, and that the marginal propensity to consume (MPC) is 0.333, or 1/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero.

The following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $100 billion, and that the marginal propensity to consume (MPC) is 0.333, or 1/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Please answer everything in photos. Last question is asking which would send a signal to firms to decrease production/keep production the same/increase production.
Use the black line (plus symbol) to plot a 45-degree line on this graph. Then use all 6 of the the blue points (circle symbols) to plot the planned expenditure line for this economy. Be sure to plot these points at the income levels listed in the table (0, 100, 200, 300, 400, and 500 billion dollars). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. (?) PLANNED EXPENDITURES (Billions of dollars) 600 500+ 400 300 200 100 0 0 100 + 300 200 400 INCOME (Billions of dollars) 500 600 On the previous graph, use the black point (plus symbol) to indi Note: Dashed drop lines will automatically extend to both axes. Suppose income is currently $100 billion. This would mean that which would send a signal to firms to ➡+ 45-Degree Line O PE Line ++ Equilibrium Income the economy is in equilibrium. planned expenditure must also equal $100 billion firms would have excess, unplanned, inventories of $225 billion firms would have a $225 billion unplanned reduction in inventories +
Transcribed Image Text:Use the black line (plus symbol) to plot a 45-degree line on this graph. Then use all 6 of the the blue points (circle symbols) to plot the planned expenditure line for this economy. Be sure to plot these points at the income levels listed in the table (0, 100, 200, 300, 400, and 500 billion dollars). Note: Plot your points in the order in which you would like them connected. Line segments will connect the points automatically. (?) PLANNED EXPENDITURES (Billions of dollars) 600 500+ 400 300 200 100 0 0 100 + 300 200 400 INCOME (Billions of dollars) 500 600 On the previous graph, use the black point (plus symbol) to indi Note: Dashed drop lines will automatically extend to both axes. Suppose income is currently $100 billion. This would mean that which would send a signal to firms to ➡+ 45-Degree Line O PE Line ++ Equilibrium Income the economy is in equilibrium. planned expenditure must also equal $100 billion firms would have excess, unplanned, inventories of $225 billion firms would have a $225 billion unplanned reduction in inventories +
The following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $100 billion, and that the marginal propensity to consume (MPC) is 0.333, or 1/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Disposable (After Tax) Income: Real GDP (Billions of dollars) 0 100 200 300 400 500 Income (Billions of dollars) 0 (Billions of dollars) 100 Ip (Billions of dollars) 50 50 50 50 50 50 G (Billions of dollars) 150 150 150 150 150 150 The following graph shows income (real GDP) on the horizontal axis and planned expenditure on the vertical axis. Planned Expenditures (Billions of dollars)
Transcribed Image Text:The following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $100 billion, and that the marginal propensity to consume (MPC) is 0.333, or 1/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Disposable (After Tax) Income: Real GDP (Billions of dollars) 0 100 200 300 400 500 Income (Billions of dollars) 0 (Billions of dollars) 100 Ip (Billions of dollars) 50 50 50 50 50 50 G (Billions of dollars) 150 150 150 150 150 150 The following graph shows income (real GDP) on the horizontal axis and planned expenditure on the vertical axis. Planned Expenditures (Billions of dollars)
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