The graph below characterizes a simple economy with only two components of aggregate expenditures: consumption and investment.Consumption and aggregate expendituresper year (billions of dollars)$6,000Multiplier5,0004,0003,0002,0001,0000Find the value of the multiplier in this example45°AE$1,000 2,000 3,000 4,000 5,000 6,000Real GDP per year (billions of dollars) Determine the effect of each of the following on the aggregate expenditures (AE) curve:An increase in govemment spendingA decrease in investmentAn increase in taxesA higher marginal propensity to consumeAE Curve#Steeper #Shifts down#Flatter#Shifts up

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The graph below characterizes a simple economy with only two components of aggregate expenditures: consumption and investment. Consumption and aggregate expenditures per year (billions of dollars) $6,000 Multiplier 5,000 4,000 3,000 2,000 1,000 0 Find the value of the multiplier in this example 45° AE C $1,000 2,000 3,000 4,000 5,000 6,000 Real GDP per year (billions of dollars)

The graph below characterizes a simple economy with only two components of aggregate expenditures: consumption and investment. Consumption and aggregate expenditures per year (billions of dollars) $6,000 Multiplier 5,000 4,000 3,000 2,000 1,000 0 Find the value of the multiplier in this example 45° AE C $1,000 2,000 3,000 4,000 5,000 6,000 Real GDP per year (billions of dollars)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Scenario A: The following facts apply to a small, imaginary economy. • Consumption spending is $5,200 when income is $8,000. • Consumption spending is $5,536 when income is $8,400. Refer to Scenario A above. The simple expenditure multiplier for this economy is Answers: 6.00 6.25 8.40 9.00
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se the information in the table to answer the following questions All numbers are in billions of 2012 dollars Real GDP (Y) $10,000 $11,000 $12,000 Consumption (C) $8.500 $0,300 $10,100 $10,000 $11.700 Planned Investment (1) $1,000 $1,000 $1,000 $13,000 $14,000 The equilibrium level of GDP is $ 12000 billion. The MPC is 0.8 (enter your response to two decimal places) Suppose that not exports increase by $200 billion. Using the multiplier formula, determine the new level of GDP A $200 billion increase in net exports leads to a change in spending of spillon, so the new level of GDP will be $billion $1,000 $1,000 Government Purchases (G) $1,400 $1,400 $1,400 $1,400 $1,400 Net Exports (NX) -$500 -$500 $500 -$500 -$500
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