200 700 580 Refer to problem 1. Suppose that potential GDP is $740O, by how much investment should change in to close the gap? * O 1480 40 O 140 O 814
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- Explain briefly whether each of the following would cause GDP to overstate or understate the degree of change in the broad standard of living. The environment becomes dirtier The crime rate declines A greater variety of goods become available to consumers Infant mortality declines2. e Examine the graph above. Suppose that government increases its spending, shifting the aggregate expenditure line upwards. GDP increases from GDP1to GDP2, and this amount is $550 billion. If the MPC is 0.8, calculate the difference between the points N and L to find out by how much the government spending changed.Suppose an economy with the following characteristics.Y = Real GDP or national incomeT = Taxes = 0.3YC = Consumption = 140 + 0.9(Y – T)I = Investment = 400G = Government spending = 800X = Exports = 600M = Imports = 0.15YGiven the information above What is the equation for Aggregate Expenditures (AE) in this economy?
- The ratio of the change in GDP to an initialchange in aggregate expenditures (AE) is thea. spending multiplier.b. permanent income rate.c. marginal expenditure rate.d. marginal propensity to consume.Y=E Autonomous expenditure = 3500 Equilibrium income = 9800 Full employment level of income is = 14000 i. Illustrate the above using a well labelled diagram. ii. What is the value of the multiplier in this economy? iii. Give the equation of the aggregate expenditure line.An economy is described by the following equations: C= 2,000 + 0.75 (Y – T) Ip= 900 G= 2,000 NX= 200 T= 2,000 Y*= 15,000 What is the Autonomous expenditure in the economy?
- Assume an economy has a consumption function of C = 0.60 (Yd) + $856.02. Additionally, this economy has investment spending = $421.91, government purchases = $224.77, taxes = $192.45, exports = $193.13, and imports = $249.19. What is the equilibrium level of GDP based on this information? Round your answer to two digits after the decimal.Consider the following NIPA data for 1Q2021 (First Quarter 20210 $ billlion) Investment: Non Residential $2,948.3 Exports $2,305.3 PCE Goods $5,183.5 Investment: Residential $1,043.7 Government Expendiures Federal $1,557.0 PCE Services $9,857.7 Imports $3,152.3 Governemnt Expenditures : State and local Goernent Expenditures $2,395.9 Change in private inventories -$90.1 1. Write the formula for GDP Compute the following: 2. Personal Consumption Expenditures (PCE): 3. Gross Private Domestic Investment (GPDI) 4. Net Exports (NX) 5. Government Expenditures (GOV) 6. GDPExplain the difference between induced consumption expenditure and autonomous consumption expenditure. Why is not all consumption expenditure induced expenditure?