The graph gives an economy's AE curve when the economy is in long-runequilibrium. Equilibrium expenditure is $12 trillion.Draw a new AE curve that shows the effect of an increase in investment.Label it AE₁.Draw a point at the new equilibrium expenditure.Label it B.Draw another AE curve that shows equilibrium expenditure in the short run.Label it AE2.Draw a point at the short-run equilibrium. Label it C.Finally, draw the AE curve when the economy returns to long-run equilibrium.Label it AE3.16-14-12-10-Aggregate expenditure (trillions of 2012 dollars)10A45 degree lineAEO151112 1314Real GDP (trillions of 2012 dollars)>>> Draw only the objects specified in the question.16

Aggregate expenditure describes the total amount of spending in the economy through consumption,…

The graph gives an economy's AE curve when the economy is in long-run equilibrium. Equilibrium expenditure is $12 trillion. Draw a new AE curve that shows the effect of an increase in investment. Label it AE₁. Draw a point at the new equilibrium expenditure. Label it B. Draw another AE curve that shows equilibrium expenditure in the short run. Label it AE₂- Draw a point at the short-run equilibrium. Label it C. Finally, draw the AE curve when the economy returns to long-run equilibrium. Label it AE3. 16- 14- 12- 10- Aggregate expenditure (trillions of 2012 dollars) A 10 45 degree line AEO Q 11 13 15 12 14 Real GDP (trillions of 2012 dollars) >>> Draw only the objects specified in the question. 16 Q 5

The graph gives an economy's AE curve when the economy is in long-run equilibrium. Equilibrium expenditure is $12 trillion. Draw a new AE curve that shows the effect of an increase in investment. Label it AE₁. Draw a point at the new equilibrium expenditure. Label it B. Draw another AE curve that shows equilibrium expenditure in the short run. Label it AE₂- Draw a point at the short-run equilibrium. Label it C. Finally, draw the AE curve when the economy returns to long-run equilibrium. Label it AE3. 16- 14- 12- 10- Aggregate expenditure (trillions of 2012 dollars) A 10 45 degree line AEO Q 11 13 15 12 14 Real GDP (trillions of 2012 dollars) >>> Draw only the objects specified in the question. 16 Q 5

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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An economy is currently in equilibrium. The following figures refer to elements in its national income accounts. A) If national income now rises by £12 billion, and as a result, the consumption of domestically produced goods rises to £68 billion. Calculate the marginal propensity to consume (MPC). B) What is the value of the multiplier? C) Comment on the results in part (a) and (b).
Note: I need help with parts d, e, and f only Following is information for the economy of Sparkle. All units are milliondollars. Their autonomous consumption is $700, and the marginal propensity to consume is 0.8.Investment spending is constant at $380, and government expenditure is constant at $300.Exports are constant at $500, and imports are constant at $800. Net taxes are constant at $100.Calculate and state your answers for the following questions.a) What is the value of consumption in this economy when the real GDP is $1100?b) What is the value of autonomous aggregate planned expenditure i.e. AE0?c) What is the value of equilibrium aggregate expenditure for this economy?d) What is the value of unplanned changes in the inventory investment when real GDP is$4000?e) What is the size of the multiplier in this economy?f) If investment spending increases by $50, what would be the value of the change in theequilibrium real GDP?
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Explain the concept of the spending multiplier.
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Please answer everything in the photo including the graph.
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