This question is based on the following information regarding a goods market model: Autonomous consumption R450 million Government spending = R300 million Taxes = R200 million Marginal propensity to consume = 3/4 = At an equilibrium income level of R2 400 million, the consumption spending is equal to ... Select one: A. R2 100 million B. R1 650 million C. R2 250 million D. R2 550 million

This question is based on the following information regarding a goods market model: Autonomous consumption R450 million Government spending = R300 million Taxes = R200 million Marginal propensity to consume = 3/4 = At an equilibrium income level of R2 400 million, the consumption spending is equal to ... Select one: A. R2 100 million B. R1 650 million C. R2 250 million D. R2 550 million

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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For the following problem, assume that the MPC, b, takes into account how much consumers spend as total income (Y) in the economy is changes. (Also: Hint GDP = Total Y) So we can rewrite our consumption function as :C= a +bYAssume:a= $2900 billionb=.75GDP= $9,000 billion.A) What is C=B) What is S=C) If consumers were the only ones buying goods in the economy, would the economy have an excess supply of goods, excess demand of goods or would the economy be at equilibrium ?
The marginal propensity to consume is defined as: Question 64 options: the ratio of change in consumption on both domestic and foreign items to the change in income average consumption as a proportion of income the ratio of the change in consumption on domestic items to the change in income the change in consumption on domestic items multiplied by the change in income the change in consumption on domestic and foreign items multiplied by the change in income
Consumption function for a country; Let C = 100 + 0.75Y. Planned investments 1 = 200. In this case a) Find the equilibrium national income. b) Find the multiplier coefficient and interpret the meaning it expresses. c) Find the equilibrium consumption amount. d) Find the equilibrium saving amount. e) How much does the equilibrium national income change if i = 100? f) If C = 0.85, how would the equilibrium national income change? Explain. g) If C = 0.85, how would the equilibrium saving amount change? Explain
Question 2 Refer to the information provided in Figure 23.9 below to answer the question(s) that follow. Aggregate expenditures ($ millions) 225 200 175 150 45° AE 100 200 300 Aggregate output ($ millions) Figure 23.9 a) Refer to Figure 23.9. Write the equation for the aggregate expenditure function (AE). Show your work. b) Refer to Figure 23.9. What is the equilibrium level of output in this economy? State the equilibrium condition used to determine this. c) Explain the forces that maintain/drive the economy to this equilibrium by considering what will happen at the following two levels of output, $300 million and $100 million. You will need to discuss changes in investment through unplanned inventories and the response of output. d) Refer to Figure 23.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million? e)The interest rate is an exogenous factor that effects the level of investment in an economy.…
In a simplified economy, there are only households and businesses. Households provide businesses with factors of production such as labor, land, and capital. In return, businesses pay wages, rent, and profit to households. This flow of resources and returns constitutes a crucial part of the circular flow of income. Households spend their income on goods and services produced by businesses, generating revenue for businesses. This process creates a continuous cycle of income and expenditure. The question is: In this scenario, the flow of money from businesses to households is primarily through: A) Consumer Spending B) Government Expenditures C) Factor Payments D) Business Investments
Suppose that country Y is identical to country Z, with the exception that country Y's population has a lower marginal propensity to consume than country Z. Initially, both countries have the same level of real GDP. The diagram shows the expenditure curve for country Y. Using the line drawing tool, draw the expenditure curve of country Z in Figure 1. Label your curve 'Ez'. Carefully follow the instructions above and only draw the required object. Figure 1 Planned Expenditure ($, trillions) Real GDP, Y ($, trillions) Ex Select ✓ Line
The autonomous consumption expenditures and autonomous investment expenditures in an economy are $600 and $350, respectively. It is also observed that individuals spend 70% of their additional income on consumption. Write down the consumption function for this economy using the information provided above. (Round your response for the intercept term to the nearest whole number and for the slope term to one decimal place.) C . +..Y Write down the aggregate expenditure function for this economy using the information provided above. (Round your response for the intercept term to the nearest whole number and for the slope term to one decimal place.) AE =..+..Y •.. The equilibrium income that would set the actual national income to the desired aggregate expenditure is $. (Round your response to the nearest dollar.) If the actual national income were $1,584 in this economy, then the inventories of the firms would be failing or rising and firms would reduce or increase their output.
Using the table below to answer the following questions. Assume all values represent trillions of dollars. Construct a graph of the Aggregate planned expenditure What is the equilibrium expenditure? Explain what happens at a real GDP of $4 trillion dollars. (Note the aggregate expenditures and the effects on inventories) What are your total autonomous expenditures? What is the marginal propensity to consume? Ignoring imports and income taxes, what is the multiplier? If investment increases by $1.5 trillion, what is the change in real GDP?
Find equilibrium GDP using the following macroeconomic model (the numbers, with the exception of the MPC, represent billions of dollars): C = 1,250 + 0.80Y |= 1,250 G = 2,000 Consumption function Planned investment function Government spending function NX = - 500 Y= C +1+G+ NX Net export function Equilibrium condition The equilibrium level of GDP is $ billion. (Round your answer to the nearest billion dollars
a) Given the following values of consumption, investment, and government purchases (all in (in millions of $) at three point of Real GDP, calculate (in millions of $) and plot the Total Expenditures curve. Real GDP Consumption Investment Government Purchases Total Expenditure Q1 600 50 200 Q2 750 80 400 Q3 1000 100 600 b) On the same diagram, draw the TP curve. Explain the reason behind the shape and position of the TP curve. c) Given, optimal inventory is $500 million worth of goods, TE = $2000 million worth of goods and TP = $2300 million worth of goods, how will the economy adjust to achieve equilibrium? d) Assume the economy is in recessionary gap. On the same diagram you in part a), show this case. If the government intervenes using…
Consider the following economy. What is the mpc in this economy? Planned Government Net Exports Aggregate Change in Real GDP (Y) Consumption (C) Investment (I') Purchases (G) (NX) Expenditures (AE) Inventories 10000 8200 800 11000 9000 600 12000 9800 13000 14000 15000 800 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 0.50 b 0.75 C 0.80 d 0.90
The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 What is the equilibrium level of GDP? What is the multiplier?