An inflationary gap is the amount by which: O Equilibrium GDP falls short of the full-employment GDP. Aggregate expenditures exceed any given level of GDP. Saving exceeds investment at the full-employment GDP. O Aggregate expenditures exceed the full-employment level of GDP
Q: In a Keynesian cross diagram, if the marginal propensity to save increases, a) the aggregate…
A: In a Keynesian cross diagram, if the marginal propensity to save increases, the savings function…
Q: At equilibrium expenditure, unplanned change in inventories must be positive O True False
A: At equilibrium expenditure, aggregate expenditure is equal to real GDP.
Q: Assume the marginal propensity to consume is 0.5 (c1 =0.5). Given this data, which of the following…
A: Marginal propensity to consume is the proportion of change in income spent on consumption
Q: Suppose disposable income increases from $7 trillion to $8 trillion. At the same time, consumption…
A: Disposable income: It is that portion of an individual’s overall income over which the recipient of…
Q: In an economy, planned aggregate expenditure is given by PAE = $500 billion - 0.6Y, where Y is equal…
A: Autonomous expenditure = $500 billion
Q: Real GDP is $16 trillion and aggregate planned expenditure is $17 trillion. As a result, unplanned…
A: Real GDP is the value of final goods and services produced in the economy within a given period of…
Q: The economy of HOYA has a spending mulipilier of 4. Based only on this information, we know that in…
A: The multiplier refers to how much change in the injection in any economy increases the level of…
Q: All of the following changes shift the consumption function except: A. an increase in income. B. an…
A: Factors that affect consumption function are: 1.Income: when income increases,consumption increases…
Q: A decrease in consumption caused by a decrease in disposable income is shown by: a movement downward…
A: C = a + by (consumption function)
Q: The figure below depicts the economy of Altrua, which is presently in equilibrium. Enter your…
A: A recessionary gap is when: total result is underneath possible result. In the event that there is…
Q: The total expenditure in Macroland begins with these initial levels (in trillions of dollars): GDP =…
A: In an economy, national income is computed by adding the components of aggregate demand and a change…
Q: Refer to Figure 3. The marginal propensity to consume equals * O 0.80 О 090 О 0.75 O 0.85
A: Marginal propensity to consume = Chnage in consumption / Change in income
Q: The total expenditure in Macroland begins with these initial levels (in trillions of dollars): GDP =…
A: Consumption function: C = Ca + MPC (Y -T) Where C is consumption Ca is autonomous consumption MPC is…
Q: If investment decreases by $70 billion and the economy's MPC is 0.5, the aggregate demand curve will…
A: Aggregate demand refers to the overall demand for goods and services in an economy. The aggregate…
Q: Which of the following statements are correct? Select one: O a. Households smooth their consumption…
A: In macroeconomics, the household sector consumes the final items created by the production sector.…
Q: t A Moving to another question will save this response. Quèstion 25 In an open mixed economy, the…
A: Answer:
Q: GDP Consumption $440 $450 490 490 540 530 590 570 640 610 Refer to the accompanying consumption…
A: Given: Gross investment = $34 billion The Lump sum tax = $30 billion To Find: The after-tax…
Q: Question 6 If a lump-sum income tax of $35 billion is levied and the MPS is 0.40, the consumption…
A: Consumption schedule shows positive relationship between consumption spending and disposable income.…
Q: Which one of the following pairs of points coincide O The Break-even point and the national income…
A: The equilibrium point is the stable state where all the forces are equal, balanced and in stable…
Q: Figure 8.2 TE 45 TE=C+I+G+(X-IM) In Figure 8.2, all of the following is true, except: O at full…
A: Equilibrium is established when aggregate demand equals output.
Q: Consumption function for a country; Let C = 100 + 0.75Y. Planned investments 1 = 200. In this case…
A: Since you have posted a question with multiple sub-parts, we will solve the first three subparts for…
Q: If unplanned inventory investment is positive, then Select one: O a. planned aggregate expenditure…
A: Inventory investment is the value of the change in total inventories held in the economy during a…
Q: If MPC =2/3, actual GDP = $14,000 and potential GDP = $13,100, there is a __________ (recessionary /…
A: The measure that depicts the final value of goods and services being produced in an economy during…
Q: 'Finance minister announces that the federal income-tax rate will rise by three percentage points."…
A: AE function refers to aggregate expenditure function.
Q: Question 2 An inflationary gap is the amount by which: O Equilibrium GDP falls short of the…
A: Inflationary Gap:- The favorable deviation among the actual Gross Domestic Product and potential…
Q: Suppose the economy operates at potential output, if the amount that businesses plan to invest is…
A: At the potential output, the economy is at full employment level and all its resources are utilized…
Q: (For students who were assigned Chapter 28) Use the aggregate expenditures model to show how…
A: Recessionary gap occurs when the actual real GDP is less than the potential real GDP. To close the…
Q: Suppose that equilibrium output in a closed economy is 1,680, consumption 1,260 and investment is…
A: In Keynesian macroeconomics, aggregate demand plays a major role because according to Keynesian…
Q: The slope of the aggregate expenditure curve equals the change in * O Planned expenditure divided by…
A: Macroeconomics studies aggregate economic concepts such as income, employment, inflation, business…
Q: The economy is initially in equilibrium at output Yo. where the aggregate expenditure (AE) line…
A: The higher the worth level, the lower the combination expenditures curve and therefore the lower the…
Q: Figure 25-4 45 Potential GDP Real GDP In Figure 25-4, if the economy is in a recessionary gap, what…
A: Recessionary gap means Real GDP is less than potential GDP.
Q: The difference between planned and unplanned spending is O Always negative O Inventories Unplanned…
A: Goods and materials which are held by a business in order to sell in the market for earning profits…
Q: If taxes fall and government spending rises by the same amount, there is very little change in GDP.…
A: When the federal government spends more money than it receives in taxes in a given year, it runs a…
Q: Which of the following correctly describes the meaning of the expression Y>r? O A) actual output is…
A: Answer: Actual output: actual output refers to the output produced in a given time period. Potential…
Q: Which of the following is true? O An increase in aggregate demand is the same as a downward shift in…
A: In an economy, aggregate demand explains the total amount of output demanded or expenditure made by…
Q: The slope of the aggregate expenditure line is always this slope equals the than 1. If there are no…
A: Aggregate expenditure is the sum total of consumption, planned investment, government purchases, and…
Q: Quèstion 8 In an open mixed economy, the inflationary expenditure gap may be described as the O A.…
A: Inflationary expenditure gap occurs when the actual equilibrium GDP (i.e., intersection point of AD…
Q: Suppose marginal propensity to consume (MPC) is between 0 and 1. This implies that O saving will…
A: The measure that tends to depict the change in the levels of consumption of consumer with respect to…
Q: An Inflationary gap is diagnosed when: O National Income Equilibrium is less than Full employment.…
A: Inflationary gap measures the difference between the current level of real GDP and the full…
Q: Consider an economy that is operating atthe full-employment level of real GDP.Assuming the MPC is…
A: The economy is at its full employment equilibrium when its actual GDP is equal to potential level of…
Q: If unplanned inventories are rising it means that real GDP is greater than Aggregate Expenditures. O…
A: Real GDP is the value of final goods and services produced in the economy within a given period of…
Q: According to Say's law which of the following statement is correct O a. The equilibrium of national…
A: Suppliers employ labors to produce goods and services in exchange of wages.
Q: Supply, S Real Interest rate Demand Loanable funds (billions of dollars per year) Refer to the graph…
A: If only the real interest rate is taxed rather than the nominal interest, for any given interest…
Q: The total expenditure in Macroland begins with these initial levels (in trillions of dollars): GDP =…
A: Consumption function: C = Ca + MPC (Y-T) Where C is consumption Ca is autonomous consumption MPC is…
Q: Which one of the following pairs of points coincide(Li) : O The Break-even point and the national…
A: In economics, there are different ways to explain a specific situation because different theories…
Q: Consumption function for a country; Let C = 100 + 0.75Y. Planned investments 1 = 200. In this case…
A: Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: 16. Given the following Consumption Function as C = 350 + 0.75 (Y) ; and actual equilibrium real GDP…
A: The equilbrium in the economy occurs at the point where the aggregate expenditure is equal to the…
Q: Equilibrium real GDP is $400 billion, the MPC = 0.9, and there are no income taxes or imports.…
A: Option (b).
Q: In an economy, autonomous consumption is $10. If Income is $90 and the mpc is 0.9, how much is…
A: Marginal propensity to consume refers to change in consumption with respect to change in income.…
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- Question:Given that the marginal propensity to consume in a fully employed closed economy is 0.75, an increase in government expenditure of $1,000 million will increase the national income by:a. $0b. $750c. $4,000d. $7,500e. $8,000If the recessionary gap is $ 200 billion and the multiplier is 2, what is the increase in aggregate spending needed to bring the economy to full employment? a)$300 billion b)$ 600 billion c)$200 billion d) $66.6 billionConsumption function for a country; Let C = 100 + 0.75Y. Planned investments 1 = 200. In this case a) Find the equilibrium national income. b) Find the multiplier coefficient and interpret the meaning it expresses. c) Find the equilibrium consumption amount. d) Find the equilibrium saving amount. e) How much does the equilibrium national income change if i = 100? f) If C = 0.85, how would the equilibrium national income change? Explain. g) If C = 0.85, how would the equilibrium saving amount change? Explain
- suppose that the was experiencing a recession and the government inject R50 billion, resulting in a total change in real GDP of R200 billion. calculate MPC?16. Consider a closed economy with demand for goods as follows: Yd = C+I+G C= 200+0.80 ( Y-T) I= 600 G=1000 T=1000 a. What is “autonomous expenditure” ( Eo) for this economy? hint: the Keynesian cross model of income determination.Consider an economy that is operating atthe full-employment level of real GDP.Assuming the MPC is 0.90, predict the effect onthe economy of a $50 billion increase in governmentspending balanced by a $50 billionincrease in taxes.
- n the Keynesian cross, assume that the consumption function is given byC = 200 + 0.75 (Y - T).Planned investment is 100; government purchasesand taxes are both 100.a. Graph planned expenditure as a function ofincome.b. What is the equilibrium level of income?c. If government purchases increase to 125, whatis the new equilibrium income?d. What level of government purchases is neededto achieve an income of 1,600?(a)Elaborate THREE (3) determinants in which consumption can be increased according to the consumption function. (b)Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300 million with the proportion of an increase in income that is spent on consumption is 0.5. An induced tax of 20% is imposed by the country. The amount of investment is RM250 million, and the amount of government spending is RM150 million. (i)Calculate the national income equilibrium. (ii)Based on your answer in (i), show the aggregate expenditure graph. (iii)Explain what would happen to the national income equilibrium if the investment changes by RM100 million.Suppose that the level GDP increased by $100 billion in a private closed economy where the marignal propensity to consume is 0.8. Aggregate expenditures must have increased by A. 20 billion b. 100 billion c. 80 billion d. 10 billion
- A country’s GDP is defined by the following equation: GDP = Consumer Spending + Investmentspending. The economy of this country is closed and there’s no government. Investment spendingis defined by the following equation: Investment Spending = Investment (planned) + Investment(unplanned). Investment (planned) is fixed at 350. Consumer spending is defined by thefollowing equation: Consumer spending = 200 + 0.55 (GDP). And for this country, PlannedExpenditure = Consumer Spending + Investment Planned. Based on this information, attempt thefollowing questions:a. “Investment (unplanned) will be negative if GDP is 900” – showing work, test theauthenticity of this statement. b. How do you think GDP (and production) will change if the income of this country is 1500?Explain by deriving Investment (unplanned) for an income of 1500. c. Derive the GDP for which Planned Expenditure = GDP. d. Supposed Investment (planned) was increased to 450. How will income-expenditureequilibrium change. e. Relate…If MPC = .8, actual GDP = $5,000 and potential GDP = $4,900, there is a __________(recessionary / inflationary) gap of $_____ and a _________ (decrease / increase) in personaltaxes of $______ would eliminate the gap.Suppose that due ot a fiscal stimulus, there is an increase in disposable incomes of $100 billion in the first round. Then, $33 billion was spent in consumption from this initial change of the disposable incomes. Following the same marginal propensity to consume, how much is the change in consumption spending in the next round from the $33 billion?
