Aggregate expenditure and Equilibrium output. Assume the following Consumption function (C) = 500 +(0.65) Y Investment (I) = 400 Tax = 1000 Government expenditure (G) = 300 Export (Ex) = 400 Import ( Im) = 0.05 YD Where YDis Disposal Income
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1.2. Graph (with correct labels) equilibrium Y and AE.
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- Suppose that the federal government has decided to build a new bridge over Lake Washington. The environmental impact review of two methods of construction is part of the implementation lag. decision lag. information lag. multiplier lag.Depict graphically the equilibrium level of National Product (NP) using the Aggregate Expenditure (AE) function. Explain why the intersection of the 45 degree line and the AE function represents equilibrium by appealing to the difference between actual and desired investmenEvaluating the relationship between R&D expenditures and net income is an example of the diagnostic analytics of __________. Multiple Choice determining relations/patterns/linkages between variables through statistical analysis performing drill-down detailed analytics identifying anomalies/outliers performing descriptive analytics
- Refer to the information provided in Table 8.1 below to answer the questions that follow. Aggregate Income ($billion) Aggregate Consumption ($billion) 0 100 50 140 100 180 150 220 200 260 Refer to Table 8.1. Society's MPC is Group of answer choices 0.20 0.90 0.95 0.80 Refer to Table 8.1. Society's MPS is Group of answer choices 0.05 0.20 0.80 0.10 Refer to Table 8.1. The equation for the aggregate consumption function is Group of answer choices C = -100 + 0.45Y. C = 100 + 0.95Y. C = 100 + 0.8Y. C = 100 + 0.75Y. Refer to Table 8.1. At an aggregate income level of $100, aggregate saving would be Group of answer choices $50 -$60. -$80 $60 Refer to Table 8.1. Assuming society's MPC is constant at an aggregate of income of $300, aggregate consumption would be ________. Group of answer choices $325. $340. $305. $425.If all 110 million households spent the same additional dollars on appliances, electronics, and furniture as the sample 30,000 rebate receiving households did so, how much did aggregate consumption increase?Consider the hypothetical country of Kejimkujik. Suppose that national income in Kejimkujik is $300 billion, households pay $100 billion in taxes, household consumption is equal to $160 billion, and the marginal propensity to consume (MPC) is 0.6. On the following graph, use the blue line (circle symbol) to plot the economy's consumption function. Consumption Function050100150200250300350400450500500450400350300250200150100500CONSUMPTION (Billions of dollars)DISPOSABLE INCOME (Billions of dollars) Suppose now that Kejimkujik’s national income increases to $330 billion. Assuming the amount paid in taxes is fixed at $100 billion and that MPC = 0.6, what is the new amount of household consumption? $148 billion $219.4 billion $220.6 billion $178 billion
- Consider a simple model, such as the one developed in this chapter. The table to the right shows the levels of desired consumption, desired investment, and desired aggregate expenditures for various levels of actual national income.Determine equilibrium levels of income and consumption for the following functions. a.C=20+0.75y,I=20, b.C=50+0.60y and I=30.where C&I, are consumption and investment respectively in billions of nairaWhich of the following statements is true? Business investment includes purchases of corporate stocks and bonds. Household consumption is more volatile than business investment. Business investment is more volatile than household consumption. Business investment is composed of fixed capital expenditure by firms and household spending on durable items like automobiles.
- The private consumption of Macroland is given by C=500+0.75Y and the private investment function is given by I=400−1000r, where r is the interest rate and Y is the GDP. The planned aggregate expenditure can therefore be written as PE=C+I=900+0.75Y−1000r. The equilibrium in the goods and services market happens when the planned expenditure is equal to the actual expenditure, or PE=Y Find the equilibrium GDP by solving the system of equations PE=900+0.75Y-1000r PE= Y for Y and PE. Note your solutions will depend on r! 1. Plot your solution for Y in a diagram measuring Y on the horizontal axis and r on the vertical axis. This curve is called the IS curve.Match the following terms ( terms are labeled 1-10 )to the correct definition(definitions are labeled a through J) aggregate consumption function, multiplier, planned aggregate expenditure (PAE), income-expenditure equlibrium GDP, marginal propensity to consume (MPC), consumption function, unplanned inventory investment, actual investment spending,inventory, autonomous spending A) The amount by which consumption rises when disposable income rise by one dollar marginal propensity to consume (MPC) B) The level of output (real GDP) at which output (real GDP) equals planned aggregate expenditure. income-expenditure equlibrium GDP C) The ratio of total change in real GDP caused by an autonomous change in aggregate spending. multiplier D) Total planned spending on final goods and services in the economy. aggregate consumption function E) The equation showing how individual household's consumer spending varies with its current disposable income. consumption function F) Consumption…Suppose an economy is described by the following equations: Y = C + I + G + X – M C = 14 + 0.60Yd I = 20 G = 20 X = 15 M = 5 +0.1Y T = 20 + 0.4Y Where Y is domestic income Yd is private disposable income C is aggregate consumption spending T is government tax revenue I is investment spending G is government spending E represents exports M represents imports of goods and services. (a) If the equilibrium national income is less than the full-employment level of income by N$100, what should be the increase in government spending or in exports to attain the full-employment level of income? (b) With a help of a diagram explain and discuss life cycle hypothesis.
