Aggregate expenditure is 790. Income is 730 and consumption is 720, income increases to 750 and consumption increases to 736. There is an increase in consumer spending of 3. ( Please specifically respond the What will the new level of aggregate expenditure be ) What will the MPC be What will the MPS be What will the multiplier be What will the new level of aggregate expenditure be

Aggregate expenditure is 790. Income is 730 and consumption is 720, income increases to 750 and consumption increases to 736. There is an increase in consumer spending of 3. ( Please specifically respond the What will the new level of aggregate expenditure be ) What will the MPC be What will the MPS be What will the multiplier be What will the new level of aggregate expenditure be

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter9: Aggregate Demand

Section: Chapter Questions

Problem 4.8P

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Aggregate expenditure is 790. Income is 730 and consumption is 720, income increases to 750 and consumption increases to 736. There is an increase in consumer spending of 3. What will the MPC be What will the MPS be What will the multiplier be What will the new level of aggregate expenditure be You must show all work you must take all steps and it must be done in a neat well organized easy to follow manner.
1. Explain briefly how spending can multiply, and then calculate the spending multiplier when the MPC isa. 0.75 b. 0.8 c. 0.6
Briefly define the following terms and explain the relationshipbetween them:MPC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . MultiplierActual investment . . . . . . . . . . . . . . . . . . . . . Planned investmentAggregate expenditure . . . . . . . . . . . . . . . . . . . . . . . . . . Real GDPAggregate output . . . . . . . . . . . . . . . . . . . . . . . Aggregate income
In an economy, autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. Exports are $500 billion and imports are $450 billion. Assume that net taxes and imports are autonomous and price level is fixed. a)What is the consumotion function? b)What is the equation of the aggregate expenditure curve? c)Calculate equilibrium expenditure. d)Calculate the multiplier. e)If investment decreases to $150 billion, what is the change in equilibrium expenditure ?