Consider the graphical representation of the Keynesian cross for a hypothetical country, where the planned aggregate spending line is graphed against the 45° line. Suppose that, in this country, there is an autonomous increase in aggregate spending of $20 billion. Show this change on the graph. 200 180 160 45 degree line 140 120 Planned AE 100 80 60 40 20 0 20 40 60 80 100 120 140 160 180 200 Real GDP (billions of dollars) What is the initial unplanned inventory investment? If the number is negative, be sure to include a negative sign initial unplanned inventory investment: $ billion After firms adjust their production, what is the total change in real GDP? If the number is negative, be sure to include a negative sign. total change in real GDP: $ billion Planned aggregate spending (billions of dollars)

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
icon
Related questions
Question
Consider the graphical representation of the Keynesian cross for a hypothetical country, where the planned aggregate
spending line is graphed against the 45° line. Suppose that, in this country, there is an autonomous increase in aggregate
spending of $20 billion. Show this change on the graph.
200
180
160
45 degree line
140
120
Planned AE
100
80
60
40
20
0
20
40
60
80
100
120
140
160
180
200
Real GDP (billions of dollars)
What is the initial unplanned inventory investment? If the number is negative, be sure to include a negative sign
initial unplanned inventory investment: $
billion
After firms adjust their production, what is the total change in real GDP? If the number is negative, be sure to include a
negative sign.
total change in real GDP: $
billion
Planned aggregate spending (billions of dollars)
Transcribed Image Text:Consider the graphical representation of the Keynesian cross for a hypothetical country, where the planned aggregate spending line is graphed against the 45° line. Suppose that, in this country, there is an autonomous increase in aggregate spending of $20 billion. Show this change on the graph. 200 180 160 45 degree line 140 120 Planned AE 100 80 60 40 20 0 20 40 60 80 100 120 140 160 180 200 Real GDP (billions of dollars) What is the initial unplanned inventory investment? If the number is negative, be sure to include a negative sign initial unplanned inventory investment: $ billion After firms adjust their production, what is the total change in real GDP? If the number is negative, be sure to include a negative sign. total change in real GDP: $ billion Planned aggregate spending (billions of dollars)
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 4 steps with 4 images

Blurred answer
Similar questions
  • SEE MORE QUESTIONS
Recommended textbooks for you
MACROECONOMICS
MACROECONOMICS
Economics
ISBN:
9781337794985
Author:
Baumol
Publisher:
CENGAGE L
Economics For Today
Economics For Today
Economics
ISBN:
9781337613040
Author:
Tucker
Publisher:
Cengage Learning
MACROECONOMICS FOR TODAY
MACROECONOMICS FOR TODAY
Economics
ISBN:
9781337613057
Author:
Tucker
Publisher:
CENGAGE L
Economics (MindTap Course List)
Economics (MindTap Course List)
Economics
ISBN:
9781337617383
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Macroeconomics
Macroeconomics
Economics
ISBN:
9781337617390
Author:
Roger A. Arnold
Publisher:
Cengage Learning
Macroeconomics: Private and Public Choice (MindTa…
Macroeconomics: Private and Public Choice (MindTa…
Economics
ISBN:
9781305506756
Author:
James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:
Cengage Learning