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 $50 billion, and that the marginal propensity to consume (MPC) is 0.667, or 2/3.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.Income: Real GDPDisposable (After Tax) IncomeCIpGPlanned Expenditures(Billions of dollars)(Billions of dollars)(Billions of dollars)(Billions of dollars)(Billions of dollars)(Billions of dollars)005010050 100 10050 200 10050 300 10050 400 10050 500 10050 The following graph shows income (real GDP) on the horizontal axis and planned expenditure on the vertical axis.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. On the previous graph, use the black point (plus symbol) to indicate the equilibrium income.Note: Dashed drop lines will automatically extend to both axes.Suppose income is currently $500 billion. This would mean that , which would send a signal to firms to . ### Educational Content: Understanding Income and Planned Expenditures#### Graph ExplanationThe graph depicts the relationship between income and planned expenditures. It's represented on a coordinate system where:- The horizontal axis (x-axis) shows "INCOME (Billions of dollars)" ranging from 0 to 600 billion.- The vertical axis (y-axis) indicates "PLANNED EXPENDITURES (Billions of dollars)" ranging from 0 to 600 billion.There are two primary lines on the graph:1. **45-Degree Line**: This line shows points where income equals planned expenditures.2. **PE Line**: Represents the planned expenditure line which may differ from the 45-degree line.- **Equilibrium Income** is marked by a black point (plus symbol) where the PE line and 45-degree line intersect.#### Instruction- On the graph, use the black point (plus symbol) to indicate the equilibrium income.#### Additional Notes- Dashed drop lines will automatically extend to both axes to aid in identifying coordinates.#### Example Scenario- Suppose income is currently $500 billion. This would mean that [insert condition], which would send a signal to firms to [insert action].### Interaction- Options include "Grade It Now," "Save & Continue," or "Continue without saving." ### Educational Resource: Analyzing Planned Expenditures in an Economy**Instructions:**Use the black line (plus symbol) to plot a 45-degree line on this graph. Then use all six of 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, 500 billion dollars).**Note:** Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.---**Graph Explanation:**The graph is a coordinate plane with two axes:- **Horizontal Axis:** Labeled as "INCOME (Billions of dollars)," it ranges from 0 to 600 billion dollars. - **Vertical Axis:** Labeled as "PLANNED EXPENDITURES (Billions of dollars)," it also ranges from 0 to 600 billion dollars.**Legend:**- **45-Degree Line:** Represented by a black line with a plus symbol. This line typically represents the line where income equals expenditure.- **PE Line:** Displayed as a blue line with circle symbols. This line denotes the planned expenditure line.- **Equilibrium Income:** Illustrated by a black cross symbol. It indicates where the economy's income and expenditures are balanced.**Instructions on Usage:**1. **Plotting the 45-Degree Line:** - Use the black plus symbol to draw a diagonal line from the origin (0,0) upwards to the maximum range of the graph. This represents scenarios where income equals expenditure.2. **Plotting the PE Line:** - At income levels 0, 100, 200, 300, 400, and 500 billion dollars, use the blue circle symbols to mark the planned expenditures. Connect these points to form the PE line.3. **Identifying Equilibrium:** - Use the black cross symbol to denote the equilibrium income, where the PE line intersects the 45-degree line.This exercise is designed to visualize the relationship between income and planned expenditures, helping to determine the economic equilibrium.

Aggregate demand is the sum of the demand emanating from various components of demand. The economy…

Answered: The following table shows consumption…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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 $50 billion, and that the marginal propensity to consume (MPC) is 0.667, or 2/3.

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.

Income: Real GDP	Disposable (After Tax) Income	C	Ip	G	Planned Expenditures
(Billions of dollars)	(Billions of dollars)	(Billions of dollars)	(Billions of dollars)	(Billions of dollars)	(Billions of dollars)
0	0	50	100	50
100			100	50
200			100	50
300			100	50
400			100	50
500			100	50

The following graph shows income (real GDP) on the horizontal axis and planned expenditure on the vertical axis.

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.

On the previous graph, use the black point (plus symbol) to indicate the equilibrium income.

Note: Dashed drop lines will automatically extend to both axes.

Suppose income is currently $500 billion. This would mean that , which would send a signal to firms to .

### Educational Content: Understanding Income and Planned Expenditures

#### Graph Explanation

The graph depicts the relationship between income and planned expenditures. It's represented on a coordinate system where:

- The horizontal axis (x-axis) shows "INCOME (Billions of dollars)" ranging from 0 to 600 billion.
- The vertical axis (y-axis) indicates "PLANNED EXPENDITURES (Billions of dollars)" ranging from 0 to 600 billion.

There are two primary lines on the graph:

1. **45-Degree Line**: This line shows points where income equals planned expenditures.
2. **PE Line**: Represents the planned expenditure line which may differ from the 45-degree line.

- **Equilibrium Income** is marked by a black point (plus symbol) where the PE line and 45-degree line intersect.

#### Instruction

- On the graph, use the black point (plus symbol) to indicate the equilibrium income.

#### Additional Notes

- Dashed drop lines will automatically extend to both axes to aid in identifying coordinates.

#### Example Scenario

- Suppose income is currently $500 billion. This would mean that [insert condition], which would send a signal to firms to [insert action].

### Interaction

- Options include "Grade It Now," "Save & Continue," or "Continue without saving."

### Educational Resource: Analyzing Planned Expenditures in an Economy

**Instructions:**
Use the black line (plus symbol) to plot a 45-degree line on this graph. Then use all six of 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, 500 billion dollars).

**Note:** Plot your points in the order in which you would like them connected. Line segments will connect the points automatically.

---

**Graph Explanation:**

The graph is a coordinate plane with two axes:

- **Horizontal Axis:** Labeled as "INCOME (Billions of dollars)," it ranges from 0 to 600 billion dollars.

- **Vertical Axis:** Labeled as "PLANNED EXPENDITURES (Billions of dollars)," it also ranges from 0 to 600 billion dollars.

**Legend:**

- **45-Degree Line:** Represented by a black line with a plus symbol. This line typically represents the line where income equals expenditure.

- **PE Line:** Displayed as a blue line with circle symbols. This line denotes the planned expenditure line.

- **Equilibrium Income:** Illustrated by a black cross symbol. It indicates where the economy's income and expenditures are balanced.

**Instructions on Usage:**

1. **Plotting the 45-Degree Line:**
- Use the black plus symbol to draw a diagonal line from the origin (0,0) upwards to the maximum range of the graph. This represents scenarios where income equals expenditure.

2. **Plotting the PE Line:**
- At income levels 0, 100, 200, 300, 400, and 500 billion dollars, use the blue circle symbols to mark the planned expenditures. Connect these points to form the PE line.

3. **Identifying Equilibrium:**
- Use the black cross symbol to denote the equilibrium income, where the PE line intersects the 45-degree line.

This exercise is designed to visualize the relationship between income and planned expenditures, helping to determine the economic equilibrium.

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