Find equilibrium GDP using the following macroeconomic model (the numbers, with the exception of the MPC, represent billions of dollars): C 500+0.80Y | = 1,250 G = 2,000 NX = 200 Y = C++ G + NX The equilibrium level of GDP is $ billion dollars.) Consumption function Planned investment function Government spending function Net export function Equilibrium condition billion. (Round your answer to the nearest

Find equilibrium GDP using the following macroeconomic model (the numbers, with the exception of the MPC, represent billions of dollars): C 500+0.80Y | = 1,250 G = 2,000 NX = 200 Y = C++ G + NX The equilibrium level of GDP is $ billion dollars.) Consumption function Planned investment function Government spending function Net export function Equilibrium condition billion. (Round your answer to the nearest

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 7TY

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Explain how to derive a total expenditures (TE) curve.
Suppose an economy had aggregate demand components with the following relationships: Consumption spending, C=140+.60*(DY) Investment spending,I=25+.15*Y Government Spending, G= 0 Net Export Spending,X=0 Tax collections, Tx=0 a. What is the equilibrium income for this economy? b. If the government decided to increase G spending by 6, what would be the new equilibrium income for this economy? c. If instead the government decided to reduce Tx (taxes) by 10, what would be the new equilibrium income for the economy? d. If instead the government decided to increase G spending and Increase Tx (taxes) by 20, what would be the new equilibrium for this economy?
Q.1.14 In the Keynesian model, what is the most important determinant of ahousehold’s consumption?(a) Disposable income.(b) Total wealth.(c) The number of persons in the household.(d) Its’ net wealth. Q.1.15 Induced consumption is: (a) the part of consumption which is independent of the level of income.(b) the minimum level of consumption that is financed from sources otherthan income.(c) The maximum level of consumption that is financed from sources otherthan income.(d) shown by the slope of the consumption function.Q.1.16 In the Keynesian model, an introduction of a proportional tax will: (a) increase the slope of the consumption function.(b) reduce the multiplier.(c) increase the equilibrium level of income.(d) increase the multiplier.Q.1.17 A decrease in the price level will: (a) shift the AS curve to the left.(b) shift the AD curve to the left.(c) shift the AS curve to the right.(d) leave both the AD curve and the AS curve unchanged.
Derive the consumption function and use this relation in the aggregate demand function to derivean equation for the equilibrium in the goods market . Why the AD line is upward sloping?Suppose the government spending falls by 100 and in this case marginal propensity to consumeis 0.8. what is the value of change in output. Draw a diagram to show the shift in AD line due tothis change in government spending and output.
Assume the level of autonomous investment is $100 billion and aggregate expendituresequal consumption and investment. Based on the following table, answer the followingquestions. a. Fill in the unplanned inventory column.b. Determine the MPC and MPS.c. If this economy employs a labor force of 40 million, what will happen to this level of employment? Explain and identify the equilibrium level of output.
Which on is incorrect a) the level of autonomous consumption is determined by the non income determinants of consumption spending b) the impact of change in one or more of the non income determinants of consumption can be illustrated by a shift of the consumption function c)the level of autonomous consumption determines the position of the consumption function D) investment spending is the most stable component of aggregate spending in the evonomy
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 = 120
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?