1. Use the following information to fill in the gaps in the table. MPC is constant, and investment, government spending and net taxes are constant at a level of 300, 500 and 200, respectively. Aggregate Planned Real Consump Planned Govern- GDP -tion Invest- ment Net Spending 500 ment Тахes Expenditures 300 200 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1,200 2,000 300 500 200 300 500 200 300 500 200 3,600 3,600 300 500 200 4,400 300 500 200 300 500 200 300 500 200 (a) Complete this table. (b) Calculate MPC and MPS. (c) Determine the equilibrium income level for this economy. (d) If real GDP is 3,000, is unplanned inventory investment positive or negative? Predict how firms will respond. (f) At which output level is saving zero? (g) At which output level is saving equal to investment? (h) If government spending falls by 200, calculate new equilibrium output level.
1. Use the following information to fill in the gaps in the table. MPC is constant, and investment, government spending and net taxes are constant at a level of 300, 500 and 200, respectively. Aggregate Planned Real Consump Planned Govern- GDP -tion Invest- ment Net Spending 500 ment Тахes Expenditures 300 200 1,000 2,000 3,000 4,000 5,000 6,000 7,000 1,200 2,000 300 500 200 300 500 200 300 500 200 3,600 3,600 300 500 200 4,400 300 500 200 300 500 200 300 500 200 (a) Complete this table. (b) Calculate MPC and MPS. (c) Determine the equilibrium income level for this economy. (d) If real GDP is 3,000, is unplanned inventory investment positive or negative? Predict how firms will respond. (f) At which output level is saving zero? (g) At which output level is saving equal to investment? (h) If government spending falls by 200, calculate new equilibrium output level.
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 5.11P
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Answer for part a , b , c and d only
Transcribed Image Text:1. Use the following information to fill in the gaps in the table. MPC is constant, and
investment, government spending and net taxes are constant at a level of 300, 500 and 200,
respectively.
Real
Consump
Planned
Govern-
Aggregate
Planned
GDP
-tion
Invest-
ment
Net
Spending
500
ment
Тахes
Expenditures
300
200
500
1,000
2,000
3,000
4,000
5,000
6,000
7,000
1,200
2,000
300
200
300
500
200
300
500
200
3,600
3,600
300
500
200
4,400
300
500
200
300
500
200
300
500
200
(a) Complete this table.
(b) Calculate MPC and MPS.
(c) Determine the equilibrium income level for this economy.
(d) If real GDP is 3,000, is unplanned inventory investment positive or negative? Predict how
firms will respond.
(f) At which output level is saving zero?
(g) At which output level is saving equal to investment?
(h) If government spending falls by 200, calculate new equilibrium output level.
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