The following table shows consumption (C), investment spending (I), and government purchases (G), in a hypothetical economy for various levels of income. Also assume that there is an income tax rate of 25%, that base consumption is $100 billion, and that the MPC is 0.333, or 1/3. This economy is closed, with no international trade, therefore net exports are equal to zero and should not be considered. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Income: Real Disposable (After Tax) Planned GDP Income C I, G Expenditures (Billions of (Billions of dollars) (Billions of (Billions of (Billions of (Billions of dollars) dollars) dollars) dollars) dollars) 100 50 150 100 50 150 200 50 150 300 50 150 400 50 150 500 50 150
The following table shows consumption (C), investment spending (I), and government purchases (G), in a hypothetical economy for various levels of income. Also assume that there is an income tax rate of 25%, that base consumption is $100 billion, and that the MPC is 0.333, or 1/3. This economy is closed, with no international trade, therefore net exports are equal to zero and should not be considered. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Income: Real Disposable (After Tax) Planned GDP Income C I, G Expenditures (Billions of (Billions of dollars) (Billions of (Billions of (Billions of (Billions of dollars) dollars) dollars) dollars) dollars) 100 50 150 100 50 150 200 50 150 300 50 150 400 50 150 500 50 150
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
Problem 4TY
Related questions
Question
![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 wwhich you would like them connected. Line segments will connect the points automatically.
600
500
45-Degree Line
400
PE Line
300
Equilirium Income
200
100
100
200
300
400
500
600
INCOME (Billions of dollars)
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 $100 billion. This would mean that
which would send a signal to firms to
PLANNED EXPENDITURES (Billions of dollars)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fee261df3-69e4-4589-a869-47dfb745e25a%2Ff05b7084-c50b-4e85-b817-6fe48ce857d7%2Fbwuhwz_processed.png&w=3840&q=75)
Transcribed Image Text: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 wwhich you would like them connected. Line segments will connect the points automatically.
600
500
45-Degree Line
400
PE Line
300
Equilirium Income
200
100
100
200
300
400
500
600
INCOME (Billions of dollars)
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 $100 billion. This would mean that
which would send a signal to firms to
PLANNED EXPENDITURES (Billions of dollars)
![4. Planned expenditure and income
The following table shows consumption (C), investment spending (I), and government purchases (G), in a hypothetical economy for various levels of
income. Also assume that there is an income tax rate of 25%, that base consumption is $100 billion, and that the MPC is 0.333, or 1/3.
This economy is closed, with no international trade, therefore net exports are equal to zero and should not be considered.
Use the given information to fill in disposable income, consumption, and planned expenditures in the following table.
Income: Real
Disposable (After Tax)
Planned
GDP
Income
C
I,
G
Expenditures
(Billions of
(Billions of dollars)
(Billions of
(Billions of
(Billions of
(Billions of dollars)
dollars)
dollars)
dollars)
dollars)
100
50
150
100
50
150
200
50
150
300
50
150
400
50
150
500
50
150](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fee261df3-69e4-4589-a869-47dfb745e25a%2Ff05b7084-c50b-4e85-b817-6fe48ce857d7%2Fc3g065o_processed.png&w=3840&q=75)
Transcribed Image Text:4. Planned expenditure and income
The following table shows consumption (C), investment spending (I), and government purchases (G), in a hypothetical economy for various levels of
income. Also assume that there is an income tax rate of 25%, that base consumption is $100 billion, and that the MPC is 0.333, or 1/3.
This economy is closed, with no international trade, therefore net exports are equal to zero and should not be considered.
Use the given information to fill in disposable income, consumption, and planned expenditures in the following table.
Income: Real
Disposable (After Tax)
Planned
GDP
Income
C
I,
G
Expenditures
(Billions of
(Billions of dollars)
(Billions of
(Billions of
(Billions of
(Billions of dollars)
dollars)
dollars)
dollars)
dollars)
100
50
150
100
50
150
200
50
150
300
50
150
400
50
150
500
50
150
Expert Solution
![](/static/compass_v2/shared-icons/check-mark.png)
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps with 2 images
![Blurred answer](/static/compass_v2/solution-images/blurred-answer.jpg)
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
![MACROECONOMICS](https://www.bartleby.com/isbn_cover_images/9781337794985/9781337794985_smallCoverImage.gif)
![MACROECONOMICS](https://www.bartleby.com/isbn_cover_images/9781337794985/9781337794985_smallCoverImage.gif)