Income and Expenditure Work It Out: Question 4 of 4 Recall that the consumption function is C = $100 billion +0.75 X YD and that the original equilibrium value of Y* is $1,600 billion. Use the accompanying table to answer each of the following questions. What is the value of the multiplier? The multiplier is GDP $0 400 Y*=S If planned investment spending falls to $200 billion, what is the new Y*? Yo so $100 $300 400 400 300 C Iplanned AEplanned $400 700 1,000 1,300 1,600 1,900 2,200 2,500 2,800 800 800 700 300 1,200 1,200 1,000 300 1,600 1,600 1,300 300 2,000 2,000 1,600 300 2,400 2,400 1,900 300 2,800 2,200 300 2,800 3,200 3,200 2,500 300 If, instead, autonomous consumer spending rises to $200 billion, what is the new Y*? lunplanned -$400 -300 -200 -100 0 100 200 300 400 billion
Income and Expenditure Work It Out: Question 4 of 4 Recall that the consumption function is C = $100 billion +0.75 X YD and that the original equilibrium value of Y* is $1,600 billion. Use the accompanying table to answer each of the following questions. What is the value of the multiplier? The multiplier is GDP $0 400 Y*=S If planned investment spending falls to $200 billion, what is the new Y*? Yo so $100 $300 400 400 300 C Iplanned AEplanned $400 700 1,000 1,300 1,600 1,900 2,200 2,500 2,800 800 800 700 300 1,200 1,200 1,000 300 1,600 1,600 1,300 300 2,000 2,000 1,600 300 2,400 2,400 1,900 300 2,800 2,200 300 2,800 3,200 3,200 2,500 300 If, instead, autonomous consumer spending rises to $200 billion, what is the new Y*? lunplanned -$400 -300 -200 -100 0 100 200 300 400 billion
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
Problem 5TY
Related questions
Question
2
Transcribed Image Text:Income and Expenditure Work It Out: Question 4 of 4
Recall that the consumption function is
C = $100 billion +0.75 X YD
and that the original equilibrium value of Y* is $1,600 billion.
Use the accompanying table to answer each of the following
questions.
What is the value of the multiplier?
The multiplier is
GDP
Yo
с
Iplanned AEplanned Unplanned
$0
$0 $100
$300
$400
-$400
400
400
400
300
700
-300
800 800 700 300
1,000
-200
1,000
300
1,300
-100
1,200 1,200
1,600 1,600 1,300
300
0
2,000 2,000 1,600 300
100
200
2,400 2,400 1,900 300
2,800 2,800 2,200
3,200
300
300
3,200 2,500 300
400
If planned investment spending falls to $200 billion, what is the new Y*?
Y* = S
If, instead, autonomous consumer spending rises to $200 billion, what is the new Y*?
1,600
1,900
2,200
2,500
2,800
billion
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Macroeconomics: Principles and Policy (MindTap Co…
Economics
ISBN:
9781305280601
Author:
William J. Baumol, Alan S. Blinder
Publisher:
Cengage Learning