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- Full Employment of National Income 700 1. The Marginal Propensity to Consume (MPC) is: A. 0.50 B. 0.60 |С.0.70 D. 0.75 2. The Multiplier is: A. 2.5 В.3 C. 4 D. 5 3. The Equilibrium level of National Income equals: A. 700 В. 740 C. 780 D. 600 4. The size of the Deflationary or Inflationary is: A. +15 B. -20 C. +40 D.-30 5. If investment spending increases by (6), the Equilibrium level of national income will increase by: A. 10 B. 15 C. 20 D. 24 A Moving to another question will save this responseSuppose GDP in this country is $1,540 million. Enter the amount for government purchases. National Income Account Value (Millions of dollars) Government Purchases (GG) Taxes minus Transfer Payments (TT) 455 Consumption (CC) 700 Investment (II) 490 Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table. Private SavingPrivate Saving = = (t-g, y-t-i, c-t,y-c-t) = = million Public SavingPublic Saving = = (t-g, y-t-i, c-t, y-c-t) = = million Based on your calculations, the government is running a budget (surplus, deficit) .181.Which of the following statements is accurate? a.When unplanned inventory changes are positive, GDP is below its equilibrium value b.When unplanned inventory changes are negative, GDP is above its equilibrium value c.When unplanned inventory changes are positive, GDP is at its equilibrium value d.When unplanned inventory changes are negative, GDP is below its equilibrium value e.None of the above 182.When unplanned inventory changes are positive, GDP is current at its equilibrium level a.True b.False 183.Consider Figure 11-10 above. Which of the following is true? a.Equilibrium GDP is $8 trillion b.Unplanned inventory changes are $0.4 trillion when GDP is $8 trillion c.Equilibrium GDP is $7 trillion d.The MPC is 1 e.Government expenditures are $8.6 trillion 184.Consider Figure 11-10 above. Equilibrium GDP occurs at a.$7 trillion b.$8 trillion c.$9 trillion d.$8.6 trillion e.there is…
- 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 -$50011.(a) Find an expression for the IS curve of the domestic economy. There is no need to show mathematical derivations. a. Y = (08)DD - (0.5) i b. Y = (12-0)DD - (1250) i 0 L * c. Y Y = (0.146 )DD - (0.840) i 5-)i + (² 5-) Y² B 0.8+0 0.8+0 0 0.5 d. Y = ( 1¹0 )DD − ( 145 )i + (14)Y* - 0 1+0 1+0 e. None of the above10:35 PM A O 60 Aggregate Expenditures Schedule 50 Tools 40 C+1 Equilibrium 30 20 10 10 20 30 40 50 Real GDP (billions of dollars) Instructions: In part b, enter your answer as a whole number. In part c, round your answer to 1 decimal place. b. What is the equilibrium GDP for this country? billion c. What is the marginal propensity to consume for this country? Aggregate expenditures (billions of dollars)
- Suppose the current price level in the economy is 150 and real GDP is$5t. Net exports fall by$1t. What must be true? A the price level is now more than 150 B SRAS shifts to the left (C) the price level is now less than 150 (D) SRAS shifts to the right4. 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 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 150Real aggregate expenditure, AE (trillions of dollars) 0 Select one: 45° K Y = AE a. inventories will increase above their desired level. b. production is less than spending. c. the economy is in equilibrium. d. production is greater than spending. AE, Refer to Figure 12-1. If the economy is at a level of aggregate expenditure given by point K Real GDP, Y (trillions of dollars)
- (a) Suppose the price level in an economy rises while the money wage rate remains constant. What happens to the quantity of real GDP supplied. How will this affect the aggregate supply or aggregate demand curve? What if the potential GDP increases? Which aggregate curve is affected and how? (b) Real GDP Consumption Planned Investment Government Purchases Net Exports $1,000 $1,000 $100 $150 -$50 2,000 1,900 100 150 -50 3,000 2,800 100 150 -50 4,000 3,700 100 150 -50 From the table data provided, answer the following questions. The numbers in the table are in billions of dollars. Show all calculations. a. What is the equilibrium level of real GDP? b. What is the Marginal Propensity to Consume? c. What is the multiplier value in this economy? d. If potential GDP is $4,000 billion, is the economy at full employment? If not, what is the condition of the economy? e. If the economy is not at full employment, by how much should government spending…2. From what was learned in class, explain what the values of the slope and vertical intercept of the aggregate consumption function mean from an economic perspective. Income-expenditure equilibrium Using the data in the following table to complete the following questions. GDP YD Planned (billions of dollars) $0 $0 $200 $100 400 400 500 100 800 800 800 100 1,200 1,200 1,100 100 1,600 1,600 1,400 100 2,000 2,000 1,700 100 2,500 2,500 2,000 100 3,000 3.000 2,300 100 1. Complete the columns for AEPlanned and unplanned in the table. 2. What is the value of the MPC? 3. What is the aggregate consumption function? AE Planned Unplanned 4. What is the equation for the planned aggregate expenditure function? 4. 5. What is the value of income-expenditure equilibrium GDP, (Y*)? 6. Explain in economic terms what happens when not in the income-expenditure equilibrium? Both when GDP > AE planned and GDP < AE planned. For each situation what needs to happen to move the economy toward equilibrium?.(a) Assume Consumption (C) is given by the equation C = 500 + 0.6(Y – T). Taxes (T) are equal to 600. Government spending is equal to 1,000. Investment is given by the equation I = 2,160 – 100r, where r = the real interest rate = 13 percent. In this case, what is the equilibrium Gross Domestic Product (GDP)/Total output (Y)/Total income? How does the equilibrium income change if government designs and executes expansionary fiscal policy? Show graphically and mathematically.