Do all parts to the question (show your work) Assume in Macroland, MPC = 0.8, and autonomous consumption = $2000. Planned investment = $5000, and planned government purchases = $4000. All planned expenditure are autonomous expenditures. Taxes ( T) is = zero and net exports = zero. a. Write out the consumption function b. What is induced consumption in this model? c. Write out the planned expenditure function (show your work) d. Calculate equilibrium real current GDP (income) (show your work) e. How much is the expenditure multiplier? f. If at the current level of equilibrium, the economy is experiencing an inflationary gap $2000. How much is the full employment GDP?

Do all parts to the question (show your work) Assume in Macroland, MPC = 0.8, and autonomous consumption = $2000. Planned investment = $5000, and planned government purchases = $4000. All planned expenditure are autonomous expenditures. Taxes ( T) is = zero and net exports = zero. a. Write out the consumption function b. What is induced consumption in this model? c. Write out the planned expenditure function (show your work) d. Calculate equilibrium real current GDP (income) (show your work) e. How much is the expenditure multiplier? f. If at the current level of equilibrium, the economy is experiencing an inflationary gap $2000. How much is the full employment GDP?

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter9: The Keynesian Model In Action

Section9.4: Recessionary And Inflationary Gaps

Problem 1YTE

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please answer e through h. Assume in Macroland, MPC = 0.8, and autonomous consumption = $2000. Planned investment = $5000, and planned government purchases = $4000. All planned expenditure are autonomous expenditures. Taxes ( T) is = zero, and net exports = zero. a) Write out the consumption function b) What is induced consumption in this model? c) Write out the planned expenditure function (show your work) d) Calculate equilibrium real current GDP (income) (show your work) e) How much is the expenditure multiplier? f) If at the current level of equilibrium, the economy is experiencing an inflationary gap $2000. How much is the full employment GDP? g) How much does planned investment change to close the inflationary gap? h) Graph the planned expenditure function. Show the change (shift) for a change in investment to close the gap. Show equilibrium points, full-employment GDP. Label all points clearly
In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, planned investment spending is $350 billion, and the marginal propensity to consume is 2/3. a) Plot the aggregate consumption function and planned aggregate spending. b) What is unplanned inventory investment when real GDP equal $600 billion? c) What is Y*, income-expenditure equilibrium GDP? d) What is the value of the multiplier? e) If planned investment spending rises to $450 billion, what will be the new Y*?
Suppose in a simple Keynesian economy, planned consumption function is given by C=250+0.65(Y-T). Planned investment, government purchases, taxes are $100 million, $100 million and $150 million respectively. What is MPC, MPS and autonomous consumption Derive the saving function. What is the equilibrium level of income? Y= AD=C+I+G If government purchases increase to $150 million, what is the new equilibrium level of income? What level of government purchases is needed to achieve an income of $2000 million? From question e) you get the newly government purchase. Now find out the multiplier value What is the amount of shift in AD curve? [Use the multiplier value from (5)]
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In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, planned investment spending is $350 billion, and the marginal propensity to consume is 2/3. c) What is Y*, income-expenditure equilibrium GDP? d) What is the value of the multiplier? e) If planned investment spending rises to $450 billion, what will be the new Y*?
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Assume an economy in which:(i) there are no exports and no imports,(ii) investors always want to spend $200 billion, or I = 200,(iii) government spends $500 billion and tax revenue is $200 billion,(iv) consumption is a linear function of disposable income, C=100+0.8YdAnswer the following questions:a. What is the marginal propensity to save (MPS)?b. What is the saving equation?c. What is the equilibrium level of national output/income (Y)?d. At the equilibrium income level (Y*, your answer to c) calculate private saving,and explain the relationship between private saving and planned investment?
consumption function is given by C = 110 + 0.75(Y - T). Planned investment is 300; government purchases is 350. Assume a balanced budget. Graph planned expenditure as a function of What is the equilibrium level of income? If government purchases increase to 400, what is the new equilibrium income? What is the multiplier for government purchases? What level of government purchases is needed to achieve an income of 2,200? (Taxes remain ) What level of taxes is needed to achieve an income of 2,200? (Government purchases remain at )
consumption function is given by C = 110 + 0.75(Y - T). Planned investment is 300; government purchases is 350. Assume a balanced budget. Graph planned expenditure as a function of What is the equilibrium level of income? If government purchases increase to 400, what is the new equilibrium income? What is the multiplier for government purchases? What level of government purchases is needed to achieve an income of 2,200? (Taxes remain ) What level of taxes is needed to achieve an income of 2,200? (Government purchases remain at ) Please answer 4 and 5
Assume in Macroland, MPC = 0.8, and autonomous consumption = $2000. Planned investment = $5000, and planned government purchases = $4000. All planned expenditure are autonomous expenditures. Taxes ( T) is = zero, and net exports = zero. f) If at the current level of equilibrium, the economy is experiencing an inflationary gap $2000. How much is the full employment GDP? g) How much does planned investment change to close the inflationary gap? h) Graph the planned expenditure function. Show the change (shift) for a change in investment to close the gap. Show equilibrium points, full-employment GDP. Label all points clearly