AE = 2,000 + ½ Y a) Each row of the table below provides a combination of real GDP and aggregate expenditure that lies on the aggregate expenditure line. Using the information provided above, complete the table below. Real GDP (Y) Aggregate Expenditure (AE) $2.000 $0 $1,000 $2,000 $3,000 $4,000 $5.000 $3,000 $4,000 b) At what level of real GDP is this economy in macroeconomic equilibrium? c) Suppose that real GDP is currently $1,000. What is the value of aggregate expenditure? d) Suppose that real GDP is currently $1,000. Is real GDP greater than or less than aggregate expenditure? By how much? e) Suppose that real GDP is currently $1,000. What does your answer to Part D say about whether there is an unexpected increase or decrease in inventories. How big is this unexpected change? f) Suppose that real GDP is currently $5,000. What is the value of aggregate expenditure? g) Suppose that real GDP is currently $5,000. Is real GDP greater than or less than aggregate expenditure? By how much? h) Suppose that real GDP is currently $5,000. What does your answer to Part G say about whether there is an unexpected increase or decrease in inventories. How big is this unexpected change?

AE = 2,000 + ½ Y a) Each row of the table below provides a combination of real GDP and aggregate expenditure that lies on the aggregate expenditure line. Using the information provided above, complete the table below. Real GDP (Y) Aggregate Expenditure (AE) $2.000 $0 $1,000 $2,000 $3,000 $4,000 $5.000 $3,000 $4,000 b) At what level of real GDP is this economy in macroeconomic equilibrium? c) Suppose that real GDP is currently $1,000. What is the value of aggregate expenditure? d) Suppose that real GDP is currently $1,000. Is real GDP greater than or less than aggregate expenditure? By how much? e) Suppose that real GDP is currently $1,000. What does your answer to Part D say about whether there is an unexpected increase or decrease in inventories. How big is this unexpected change? f) Suppose that real GDP is currently $5,000. What is the value of aggregate expenditure? g) Suppose that real GDP is currently $5,000. Is real GDP greater than or less than aggregate expenditure? By how much? h) Suppose that real GDP is currently $5,000. What does your answer to Part G say about whether there is an unexpected increase or decrease in inventories. How big is this unexpected change?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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