Consider the planned aggregate expenditure diagram in the figure below. Planned Aggregate Expenditure (PAE, billions of $) PAE = Y 500 450 PAE 400 350 300 250 200 150 100 50 50 100 150 200 250 300 350 400 450 500 Actual Aggregate Expenditure (Y, billions of $)
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- In the below table, C is consumption expenditure, Iis investment, G is government expenditure, and NX is the net exports. All entries are in million dollars. (SHOW THE STEPS OF CALCULATIONS) a) What is the equilibrium level of real GDP? b) What is the slope of the aggregate expenditure function? c) What is the unplanned inventory change when GDP is equal to $2200 million? d) How much is the level of savings when income is $2300 million?From the information below calculate aggregate demand; Consumption (C) = $200 + 0.6Y Investment (I) = $300 Government (G) = $100 Net Export (NX) = $50 Which one of the following statements about Consumption and Aggregate Demand is CORRECT when the economy achieves equilibrium GDP? a. One is 350 greater than the other b. One comprises the other c. They are valued at $1025 and $1375, respectively d. They are valued at $1375 and $1025, respectively e. They are both the sameIn the aggregate expenditure model, what is NOT necessarily a characteristic of an economy in equilibrium?(a) The aggregate expenditure line is equal to the 45-degree line.(b) Aggregate expenditures are equal to income.(c) Investment equals saving.(d) Nothing is pressuring the economy to move to a higher or lower level of output
- Determine aggregate expenditures (AE) in this economy when real GDP (Y) is equal to $1,500 billion, $2,000 billion, and $2,500 billion.When Y = $1,500 billion, AE = billion .When Y = $2,000 billion, AE = billion . When Y = $2,500 billion, AE = billion .Question Aggregate expenditure is the total amount of spending in the economy that determines the level of the GDP. Components of aggregate expenditure are autonomous expenditure, planned private investments, government expenditure, and net exports. When autonomous expenditure increases or decreases, it has a multiplied effect on the GDP. Referring to the 10-year historical period that you chose for your final project, discuss an example of a change in autonomous spending. Research a government policy implemented during that time and discuss the multiplier effect it had on the economy. I have choosen 1980-1989 in the US. **This is not a research paper - it's just a quick brief for a discussion board**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 ?
- Calculate autonomous consumption expenditure from the following date about an economy which is In equilibrium.National income = Rs. 1,100Marginal propensity to save = 0.20Investment expenditure = Rs. 80(Autonomous Consumption Expenditure = 120based on macroeconomic theory, one of the following four answers is a correct description of the concept, “expenditure multiplier”. Which one? A/ It is the idea that decreasing national income affects the equilibrium level of GDP by the same amount of that decrease in income. B/ It is the concept that increasing national income affects the equilibrium level of GDP on par with the amount of increased income. C/ The expenditure multiplier is the idea that a given change in spending leads to an equal change in the equilibrium level of GDP. D/ It is the concept that an increase in spending causes a more than proportionate change in GDP.Study the diagram below and answer the question.Which one of the following statements is false? A Y1 represents the equilibrium level of income.B The curve labelled A = C + I shows the total of consumption and investment spending.C The curve labelled C shows the total of autonomous and induced consumption spending.D The point labelled D shows where savings equal investment. In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregateproduction of income by Y. Which one of the following statements is incorrect? A When A is greater than Y, there is disequilibrium and Y will tend to increase.B When A is equal to Y, there is equilibrium and Y will remain unchanged.C When A is less than Y, there is disequilibrium and Y will decrease.D When A is greater than Y, there is disequilibrium and A will decrease.
- Silesia You are provided with the following information about an imaginary economy called Silesia. Use the information provided in the table to answer the questions below. Government expenditure 400 Exports 250 Autonomous imports 50 Autonomous consumption 150 Investment Expenditure 300 Full-employment output 2040 Marginal propensity to consume 0.75 Marginal propensity to import 0.15 Source: Bester, N. 2017. Tax rate 0.25 5.1 Derive and calculate the consumption function for the data provided. Show all formulas and calculations used. 5.2 Calculate autonomous spending. Show all formulas and calculations used 5.3 Calculate the multiplier. Show all formulas and calculations used. Round off your final answer to 1 decimal.Assume you have the following model of the expenditure sector:AD = C + I + G + NX C = Co + cYD YD = Y - TA + TR TA = TAo TR = TRo I = Io G = Go NX = NXo a. If a change in income by ∆Y = - 800 leads to a change in savings by ∆S = - 160, what is the size of the expenditure multiplier? c. If a change in exports by NX = - 200 is accompanied by a change in consumption by ∆C = - 800, what is the size of the expenditure multiplier?Assume that the Malaysian Prime Minister proposes to implement an economic recovery plan valued at RM300 million comprising of tax cuts and government transfer payments to households. If taxes fall by RM150 million and the spending on government transfer payments increases by RM150 million, which component ( transfer payments to households or tax cuts) of the recovery plan would have the larger effect on the equilibrium of aggregate expenditure, assuming other things are unchanged? a) Briefly state and evaluate the problem of time lags in enacting and applying fiscal policy i. How might expectations of a near-term policy reversal weaken fiscal policy based on changes in tax rates ii. In view of your answers, explain the following statement: “Although fiscal policy clearly is useful in combating the extremes of severe recession and demand-pull inflation, it is impossible to use fiscal policy to fine-tune the economy to the full-employment, noninflationary level of real GDP and…