c,d,e,f Σ00Planned expenditure function questionDo 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.%3DTaxes ( T) is = zero, and net exports zero.%3Da.Write out the consumption functionb. What is induced consumption in this model?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.nɔHow much is the full employment GDP?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 toclose the gap. Show equilibrium points, full-employment GDP. Label all points clearl114F4homepuaF12prt scinseF2F3F5F6F7F8F10F11#34.9.6.E.B.

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Planned expenditure function question Do all parts to the question (show your work)

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter9: The Keynesian Model In Action

Section9.4: Recessionary And Inflationary Gaps

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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*?
. Consider an economy in which autonomous consumption, planned autonomous investment, autonomous government expenditure, autonomous taxes, and the marginal propensity to consume are given (there are no net exports). Autonomous consumer spending = $3,000 Ip = $5,000 G = $3,000 T = $4,000 MPC = .75 What is the level of actual investment [Actual investment includes both planned and unplanned inventory changes. Hint: Compare Y and C + I + G at the level of income in part (a)] if Y = $19,000? What is the level of unintended or unplanned inventory investment?
The following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $50 billion, and that the marginal propensity to consume (MPC) is 0.667, or 2/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Income: Real GDP Disposable (After Tax) Income C Ip G Planned Expenditures (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 0 0 50 100 50 100 100 50 200 100 50 300 100 50 400 100 50 500 100 50…
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*?
The following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $25 billion, and that the marginal propensity to consume (MPC) is 0.333, or 1/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Income: Real GDP Disposable (After Tax) Income C Ip G Planned Expenditures (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 0 0 25 150 50 100 150 50 200 150 50 300 150 50 400 150 50 500 150 50…
Given C=500 + 0.80Y and I = 100 and C and I are the only components of AD. Based on the equilibrium level of output above, how much of it came from induced consumption spending?Based on the multiplier model, the equilibrium level of output will be equal toHow much is the value of the expenditure multiplier?
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?
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
Problem 1 Consider the Aggregate expenditure model. Where:AD = C + I + G + NX where I, G, and NX are all autonomous.C = C + c∗(Y + T R − T A where T A = tY with t ∈ [0, 1] is the proportional tax rate and c∗ ∈ (0, 1) is the marginal propensity to consume.a. Using the information above, solve for AD. Combineall the autonomous terms into one term, A. b. In an (x, y) plane, where Y is on the horizontal axis and AD is on thevertical axis, illustrate the AD curve you derived above along with the 45degreeline.Make sure to explain how you got the Y-intercept and solve for the slope. c. Provide an economic interpretation for the slope of the AD function. d. Solve for the equilibrium level of output and show what happens to outputwhen G increases by 1 unit. That is, what is ∆Y ? Show your result graphicallyand explain how the AD curves shifts and by how much. Briefly explain. e) Suppose that ∆G = −1 and ∆T R = +2. Show what happens to theequilibrium level of output. Explain your result
Q) Consider the multiplier model (in which the only component of expenditure that depends on income is consumption), and suppose that investment expenditures decrease by $50 million. All else equal, then the spending-balance level of output will A) increase by $50 million B) decrease by $50 million C) decrease by more than $50 million D) decrease by less than $50 million Explain it early and correctly