If investment increases by $50 billion, by how much will aggregate demand change? Aggregate demand will _______. A. increase by less than $50 billion because there will be fewer goods and services produced for consumption expenditure B. increase by more than $50 billion because the increase in aggregate income induces an increase in consumption expenditure C.
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- 18 - : If aggregate demand increases in an economy while aggregate demand is constant in the short run, which of the following statements is correct for the new equilibrium point?A) price decreases and national income increasesB) price rises national income risesC) price increases and national income does not changeD) price goes up and national income goes downE) price decreases and national income decreases.19 - : In which of the following expressions is the equation of change given correctly?A) MV=VK B) MT=PV C) MV=PT D) MP=VY E) MV=P1) Following is information for the economy of Sparkle. All units are milliondollars. Their autonomous consumption is $700, and the marginal propensity to consume is 0.8.Investment spending is constant at $380, and government expenditure is constant at $300.Exports are constant at $500, and imports are constant at $800. Net taxes are constant at $100.Calculate and state your answers for the following questions.a) What is the value of consumption in this economy when the real GDP is $1100?b) What is the value of autonomous aggregate planned expenditure i.e. AE0?c) What is the value of equilibrium aggregate expenditure for this economy?d) What is the value of unplanned changes in the inventory investment when real GDP is$4000?e) What is the size of the multiplier in this economy?f) If investment spending increases by $50, what would be the value of the change in theequilibrium real GDP?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 same
- Question: How does the concept of aggregate demand relate to overall economic output, and what factors can influence changes in aggregate demand? A) Aggregate demand represents the total wealth of a nation and is unaffected by external factors. B) Aggregate demand is the total spending in an economy and includes consumption, investment, government spending, and net exports; factors like changes in consumer confidence can influence it. C) Aggregate demand solely considers government spending and is unrelated to economic output. D) Aggregate demand is the total production in an economy and is determined solely by government policies.THE AGGREGATE EXPENDITURE MODEL (IN THE SHORT RUN)YOU MUST SHOW YOUR CALCULATIONS IN THE SPACE BELOWFOR THE NEXT PROBLEM USE THE FOLLOWING FORMULA:CHANGE IN GDP = [ 1 / (1-MPC) ] * CHANGE IN GInitially, the economy is producing $13 trillion in goods and services and the government is spending $2 trillion.Then the government decides to increase its spending to $2.7 trillion. Compute the new equilibrium level of output. Assume that the marginal propensity to consume is 0.7 (MPC=0.7).10.1For each of the following events,explain the short-run and long-run effects on output and price level,assuming policymakers take no action. a) The stock market declines sharply,reducing consumers' wealth. b) The federal government increases spending on national defence. 10.2 In which of the following circumstances is expansionary fiscal policy more likely to lead to a short-run increase in investment?Explain. a)When the investment accelarator is large or when it is small?
- 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*?If the recessionary gap is $ 200 billion and the multiplier is 2, what is the increase in aggregate spending needed to bring the economy to full employment? a)$300 billion b)$ 600 billion c)$200 billion d) $66.6 billionCould you do C and D A country has an initial real output of $162 Billion. What would the final output be expected to be if:a. The government spends $15 billion on infrastructure and the MPC of the country is 0.35b. The government reduces taxes by $3.5 billion and the MPW of the country is 0.75c. The government makes no changes to taxes or spending.d. The government decreases spending nationwide by $9 billion in a country where people are likely to withdraw 60 cents on every new dollar of income.
- The graph models an economy in equilibrium with a real GDP of $180 billion. Suppose that consumers' expectations about future incomes change, causing unplanned inventory investment to increase by $30 billion. Shift the planned aggregate expenditure (AE) line to show the effect of this change. *Image* 1) This change will cause the equilibrium level of real GDP to a) decrease. b) remain unchanged. c) increase. 2) By how much will GDP change once the new equilibrium is reached? If GDP will decrease, be sure to include a negative sign. GDP change: $ ________ billion13 Which of the following would increase aggregate demand? Increase in savings. Increase in taxation. Decrease in consumption spending. Increase in government spending.Answer the following questions, which relate to the aggregate expenditures model:a. If Ca is $100, Ig is $50, Xn is -$10, and G is $30, what is the economy’s equilibrium GDP?b. If real GDP in an economy is currently $200, Ca is $100, Ig is $50, Xn is -$10, and G is $30, will the economy’s real GDP rise, fall, or stay the same?c. Suppose that full-employment (and full-capacity) output in an economy is $200. If Ca is $150, Ig is $50, Xn is -$10, and G is $30, what will be the macroeconomic result?