Use the information in the following table to answer the questions below. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Also, for simplicity, assume this economy has no taxes. In your answers, expain brifly how did you get the numerical result.Real GDPConsumptionPlannedInvestmentGovernmentPurchasesNet Exports$9,000$7,800$1,500$1,000-$700$10,000$8,600$1,500$1,000-$700$11,000$9,400$1,500$1,000-$700$12,000$10,200$1,500$1,000-$700$13,000$11,000$1,500$1,000-$700$14,000$11,800$1,500$1,000-$700 (a) What is the equilibrium level of real GDP in this economy?(b) Compute the marginal propensity to consume.(c) Compute the government expenditures multipler.(d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Use the information in the following table to answer the questions below. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. Also, for simplicity, assume this economy has no taxes. In your answers, expain brifly how did you get the numerical result.

Real GDP	Consumption	Planned Investment	Government Purchases	Net Exports
$9,000	$7,800	$1,500	$1,000	-$700
$10,000	$8,600	$1,500	$1,000	-$700
$11,000	$9,400	$1,500	$1,000	-$700
$12,000	$10,200	$1,500	$1,000	-$700
$13,000	$11,000	$1,500	$1,000	-$700
$14,000	$11,800	$1,500	$1,000	-$700

(a) What is the equilibrium level of real GDP in this economy?

(b) Compute the marginal propensity to consume.

(d) Suppose net export increases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?

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