The graph below shows the Aggregate Expenditures Model diagram in Frohlandia. Potential GDP $10,000 $8,000- Aggregate expenditure $6,000 E₂ $4,000 $2,000 45° $0 $0 $2,000 $4,000 $6,000 $8,000 $10,000 Real GDP (Y) According to the graph above, the equilibrium real GDP in Frohlandia is_ Frohlandian economy is experiencing. Multiple Choice $2,000; full employment $4,000; a recessionary gap $6,000; a recessionary gap $10,000; an inflationary gap Aggregate Expenditure and the

The graph below shows the Aggregate Expenditures Model diagram in Frohlandia. Potential GDP $10,000 $8,000- Aggregate expenditure $6,000 E₂ $4,000 $2,000 45° $0 $0 $2,000 $4,000 $6,000 $8,000 $10,000 Real GDP (Y) According to the graph above, the equilibrium real GDP in Frohlandia is_ Frohlandian economy is experiencing. Multiple Choice $2,000; full employment $4,000; a recessionary gap $6,000; a recessionary gap $10,000; an inflationary gap Aggregate Expenditure and the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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C = 25 + .95 Yd I = 15 a. Calculate equilibrium disposable income for the one-sector model. b. Čalculate equilibrium disposable income for the two-sector model. c. Calculate the multiplier. d. Graph your results. Provide labels consistent with the webinar examples.
The aggregate demand function: yad =C+1+G₁ = 500+ 0.75Y is plotted on the graph to the right. The graph also shows the 45° line where aggregate output Y equals aggregate demand yad for all points. What happens to aggregate output if government spending rises by 100? The equilibrium level of output rises by $ billion. (Round your response to the nearest billion.) Consumption Expenditure, C ($ billions) 3000- 2800- 2600- 2400- 2200- 2000- 1800- 1600- 1400- 1200- 1000- 800- 600- 400- 200- 0- 0 yad =C+I+G₁ = 500 +0.75Y Y = yad 45° 400 800 1200 1600 2000 2400 2800 Disposable Income ($ billions)
The Following Questions include graphs that I cannot upload if you can please help with visuals also, thank you. The following graph shows the consumption function (C) for a hypothetical private closed economy and a 45-degree line along which aggregate expenditure equals real GDP (AE=Y). Recall that a private closed economy does not have government and does not trade with the rest of the world (so G=0 and (X-M)=0). In a private closed economy, real GDP is equal to disposable income. At the current real interest rate, the level of investment in this economy is equal to $50 billion at each level of real GDP. Use the blue line (circle symbols) to plot this economy's initial aggregate expenditure line, (C + I). Then, use the black point (X symbol) to indicate this economy's initial equilibrium output. Dashed drop lines will automatically extend to both axes. (Hint: You can see two of the coordinates along the consumption function by mousing over the green triangles on the graph.) At the…
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In Utopia (a country with substantial excess resources), consumers spend 70% of their incomes and save 30%; the country spends 30% of GDP on imports and the government typically takes 10% of household incomes in taxation.a) What is the value of the multiplier?Last year, the Utopian Government spent 5Bn Utopian Dollars on current expenditure; Utopian households spent 0.5Bn Utopian Dollars in “autonomous consumption” and Utopian enterprises sold goods and services worth 10 Bn Utopian dollars to other countries. Utopian investors spent 15Bn Utopian dollars in maintaining and enhancing the country’s capital equipment.b) What was the value of GDP last year?c) What was the value of the Utopian Government’s budget surplus or deficit last year?d) How would the value of the multiplier (in 2(a) change if Utopia was a closed economy (so zero imports)?e) If the Utopian economy were already at its potential GDP (ie its full -employment GDP), what would happen to the value of the multiplier?
Using the information below for a four sector economy, calculate the following: C 400 + 0.65 Yd !! = 100 + 0.15 Y 500 + 0.1 Y = 350 + 0.15Y = 600 %3D M 50 + 0.2 Y 3,715.28 Y-T Yf %3D Yd Part 5: Suppose that government spending changes to G-450 + 0.1 Y. What is the value of the new equilibrium income (Ye2)? Number Using the new government spending function in Part 5, calculate the following: Part 6: What is the size of the positive(+)/negative(-) output gap? Number Part 7: Change in government spending (increase(+ydecrease(-) required to close the new gap? Number Part 8: What was the value of the Govt surplus(+ydeficit(-) at Ye2? (Before the change that took place in part 7) Number
If the current value of GDP is $13.28 trillion and the government is planning to increase spending by $800 billion (all in one year), the percentage increase in GDP using the multiplier estimate of the first economist is percent. (Round your response to two decimal places.)
Show the impact of the increase in government purchases on the interest rate by shifting one or both of the curves on the following graph. INTEREST RATE 15.0 12.5 10.0 7.5 5.0 2.5 0 0 15 Money Supply known as the Money Demand 30 45 60 MONEY (Billions of dollars) 75 90 Money Demand Money Supply image 2 Suppose that for every increase in the interest rate of one percentage point, the level of investment spending declines by $0.5 billion. Based on the changes made to the money market in the previous scenario, the new interest rate causes the level of investment spending to by Taking the multiplier effect into account, the change in investment spending will cause the quantity of output demanded to by ▼at every price level. The impact of an increase in government purchases on the interest rate and the level of investment spending is ▼ effect. Use the purple line (diamond symbol) on the graph at the beginning of this problem to show the aggregate demand curve (AD3) after accounting for the…
Consider an economy that uses exclusively labor and capital to produce.Suddenly, the government of the economy plans to permanently increase the level ofgovernment purchases. Please use words and figures to illustrate your answers.(1) Suppose the economy is a closed one. How does the long-run GDP of the economychange because of the increased government purchases? (2) Will your answer to (1) be changed if the economy is an open one? Explain youranswers briefly.(3) Suppose the economy is a closed one. Will the increased government purchaseschange the equilibrium interest rate?
The Image attached titled Table 1 is data for a hypothetical private-closed economy. Use the information in the Table 1 to analyze aggregate expenditures (AE) model attached (Figure 1. Equilibrium in a Private Closed Economy). Question 1 Identify the mistake and explain why the graph of the aggregate expenditures line does not correctly illustrate the economy's equilibrium. Question 2 Chart the aggregate expenditures (AE) model in Excel using the data from Table 1: A Private Closed Economy. Remember, the 45degree line (also known as the Keynesian Cross) is a tool that shows how differences in aggregate expenditures and real GDP can affect business inventories which will affect future levels of real GDP. Aggregate expenditure and GDP are both function of consumption, investment, government spending, and net exports. So, the equations for the two are identical: Y = C + I + G + NX, and AE (aggregate expenditure) = C + I + G + NX For private closed economy the equation…