The following graph explores the relationship between income (real GDP) on the horizontal axis and planned expenditure on the vertical axis.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. Ensure these points correspond to the income levels listed in the table: 0, 100, 200, 300, 400, and 500 billion dollars.**Note**: Plot your points in the desired order to ensure connections. Line segments will connect the points automatically.Graph Explanation:- The graph is a two-dimensional plot with "INCOME (Billions of dollars)" on the horizontal axis and "PLANNED EXPENDITURES (Billions of dollars)" on the vertical axis. The axes range from 0 to 600 billion dollars.- There are three elements to be plotted: - **45-Degree Line (black plus symbol)**: Represents equal levels of income and expenditure. - **PE Line (blue circle symbols)**: Represents planned expenditure at various income levels. - **Equilibrium Income (black point)**: Where the 45-degree line intersects the PE line, indicating where income equals planned expenditure.Additional Instructions:- Place the black point (plus symbol) at the equilibrium income on the graph.- **Note**: Dashed drop lines will automatically extend to both axes.- Consider the scenario where income is currently $100 billion. This indicates a specific economic condition prompting firms to adjust their production or pricing strategies.This graph is a visual aid for understanding how income and planned expenditure relate, helping illustrate concepts like equilibrium income. **4. Planned expenditure and income**The following table shows consumption ($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 GDP (Billions of dollars) | Disposable (After Tax) Income (Billions of dollars) | $C$ (Billions of dollars) | $I_p$ (Billions of dollars) | $G$ (Billions of dollars) | Planned Expenditures (Billions of dollars) ||---------------------------------------|-----------------------------------------|--------------------|--------------------|-----------------|---------------------|| 0 | 0 | 100 | 50 | 150 | || 100 | | | 50 | 150 | || 200 | | | 50 | 150 | || 300 | | | 50 | 150 | || 400 | | | 50 | 150 | || 500 | | | 50 | 150 | |**Table Explanation:**- **Income: Real GDP:** This column displays the total economic output for various income levels in billions of dollars.- **Disposable (After Tax) Income:** After accounting for a 25% tax rate, this column is meant to reflect the net income available for spending.- **$C$:** Represents consumption in billions of dollars.- **$I_p$:** Indicates planned investment spending.- **$G$:** Represents government purchases, also given the same value in each row.- **Planned Expenditures:** This column should be calculated by summing up $C$, $I_p$, and $G$.

If the income tax rate is 25%, the disposable income (after tax) is equal to 75% of the real GDP.…

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

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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