Draw a planned aggregate expenditure curve for an economy where autonomous expenditure is $200 billion and the marginal propensity to consume is equal to 0.50. Plot values for 'Actual Aggregate Expenditure' of $100, $200, $300, $400, $500, and $600. Instructions: Use the graphing tool to draw the planned aggregate expenditure curve by plotting points at each level of output (Y) starting with zero and ending with 500. Planned Aggregate Expenditure (PAE, billions of dollars) PAE = Y 500 450 400 350 300 250 200 150 100 50 200 300 400 500 Actual Aggregate Expenditure (Y, billions of dollars) 100 Tools PAE

Draw a planned aggregate expenditure curve for an economy where autonomous expenditure is $200 billion and the marginal propensity to consume is equal to 0.50. Plot values for 'Actual Aggregate Expenditure' of $100, $200, $300, $400, $500, and $600. Instructions: Use the graphing tool to draw the planned aggregate expenditure curve by plotting points at each level of output (Y) starting with zero and ending with 500. Planned Aggregate Expenditure (PAE, billions of dollars) PAE = Y 500 450 400 350 300 250 200 150 100 50 200 300 400 500 Actual Aggregate Expenditure (Y, billions of dollars) 100 Tools PAE

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter18: The Keynesian Model

Section: Chapter Questions

Problem 6SQ

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Similar questions

In 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
Consider an economy in which investment is $200, government purchases are $500, net exports are $30, and the price level is fixed. Taxes vary with income, and as a result, the consumption schedule looks like that shown in the following table. Fill in the missing values. Graph the aggregate expenditure graph using the above data. This is the graph with Aggregate Expenditures on the Y axis and Real GDP on the x axis. Start with a forty five degree line. Suppose that full employment comes at GDP=$1,480. Is the economy in an inflationary or recessionary gap? What action would you take to close the gap?
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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 ?
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Suppose the aggregate expenditure schedule for an economy is given by the equation: AE = 800 + 0.8Y Where AE represents the aggregate expenditure and Y represents the national income (output) level. Calculate the equilibrium level of national income in this economy.