Economics: Principles & Policy
14th Edition
ISBN: 9781337696326
Author: William J. Baumol; Alan S. Blinder; John L. Solow
Publisher: Cengage Learning
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Question
Chapter 25.A, Problem 4TY
(a)
To determine
Calculate the equilibrium level of
(b)
To determine
Check whether there is an inflationary or a recessionary gap.
(c)
To determine
The impact of GDP when investment increased.
(d)
To determine
Check whether there is an inflationary or a recessionary gap.
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Q1:You are given the following income-expenditures model for an economy :
Consumption C = 300 + .64Yd
Tax (T) = $60
Government expenditure G = $100
Investment (I) = $120
From above data calculate the follows:
1. Equilibrium level of income
2. At the equilibrium level of income, what is the amount of consumption?
Use the following equations for question 16.C = $400 +0.8Y I = $300 G = $200X = $300 -0.4Y
16. What is the equilibrium level of real GDP?
Answer the following questions, which relate to the aggregate expenditures model:a. If Ca is $100, Ig is $50, Xn is -$10, and G is $30, what is the economy’s equilibrium GDP?b. If real GDP in an economy is currently $200, Ca is $100, Ig is $50, Xn is -$10, and G is $30, will the economy’s real GDP rise, fall, or stay the same?c. Suppose that full-employment (and full-capacity) output in an economy is $200. If Ca is $150, Ig is $50, Xn is -$10, and G is $30, what will be the macroeconomic result?
Chapter 25 Solutions
Economics: Principles & Policy
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