QUESTION 21 Refer to the information provided in Figure 8.9 below to answer the questions that follow. AE 225 200 175 150 45° 100 200 300 Aggregate output ($ millions) Figure 8.9 Refer to Figure 8.9. $200 million is O the break even income. O where saving equals aggregate expenditures. O where saving equals consumption. O the equilibrium income. Aggregate expenditures (%$ millions)

QUESTION 21 Refer to the information provided in Figure 8.9 below to answer the questions that follow. AE 225 200 175 150 45° 100 200 300 Aggregate output ($ millions) Figure 8.9 Refer to Figure 8.9. $200 million is O the break even income. O where saving equals aggregate expenditures. O where saving equals consumption. O the equilibrium income. Aggregate expenditures (%$ millions)

ECON MACRO

5th Edition

ISBN:9781337000529

Author:William A. McEachern

Publisher:William A. McEachern

Chapter11: Fiscal Policy

Section: Chapter Questions

Problem 1.6P

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ADVANCED ANALYSIS Assume that the consumption schedule for a private closed economy is such that consumption is: C = 100 + 0.75Y Assume further that planned investment Ig is independent of the level of real GDP and constant at Ig = 50. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C + Ig Instructions: Enter your answers as whole numbers.a. Calculate the equilibrium level of income or real GDP for this economy. Equilibrium GDP (Y) = $ . b. What happens to equilibrium GDP if Ig changes to 60? Equilibrium GDP (Y) = $ . What does this outcome reveal about the size of the spending multiplier? Spending multiplier = .
The table below provides Income and consumption Data in billions of dollars. Answer questions 21-24 based on it.Disposable Consumption SavingsIncome100 80 --------200 150 ---------What is the marginal propensity to save for this economy? a. 0.75 b. 0.50 c. 0.3 d. cannot be determined
able 27-1 Y = C + I + G C = 500 + 0.8(Y − T) I = 300 G = 700 T = 0.25Y Table 27-1 Y = C + I + G C = 500 + 0.8(Y−T) I = 300 G = 700 T = 0.25Y Refer to Table 27-1. What is the level of consumption in this model? a. 2,550 b. 2,950 c. 2,350 d. 2,750 e. 2,150
1.In Figure 1, when disposable income is 0, how much is consumption, saving, autonomous consumption, and induced consumption? 2.In Figure 1, when disposable income is 2500, how much is consumption, saving, autonomous consumption, and induced consumption? 3.In Figure 1, when disposable income is 4,000, how much is the consumption, savings, autonomous consumption and induced consumption?
1. In using the expenditure approach to GDP, consumption.... 2.The long -run aggregate supply curve is ? 3. National saving equals private saving plus government saving ,which inturn equals? 4. The mpc and mps measures charges in consumption expenditure and saving that result from changes in ? 5. The sum of the components aggregate expenditure that are not influence by real GDP is called ?
We again assume asimple closed economy with GDP of 100 and:c0(autonomous consumption) = 20c1 (marginal propensity to consume) = 0.6I (investment) = 20.a) Now assume that c0falls by 5 (i.e. 5% of GDP), i.e. for any given level of output,consumption will fall by 5. Show the implied fall in the AD function in yourdiagram and show that output will fall by more than 5.b) Show that the multiplier is equal to 2.5, and hence that, in the new equilibrium,output will have fallen by 12.5 (i.e. by 12.5%)c) How big would the impact be if, say, c1 = 0.4 or c1 = 0.8? Explain the difference.
(a) Suppose in a simple Keynesian economy, planned consumption function is given by C=250+0.65(Y-T). Planned investment, government purchases, taxes are $100 million, $100 million and $150 million respectively. What is MPC, MPS and autonomous consumption Derive the saving function. What is the equilibrium level of income? Y= AD=C+I+G If government purchases increase to $150 million, what is the new equilibrium level of income? What level of government purchases is needed to achieve an income of $2000 million? From question e) you get the newly government purchase. Now find out the multiplier value What is the amount of shift in AD curve? [Use the multiplier value from e)] (b) In a self-regulating economy “X”, labor supply is 40 million but labor demand is 10 million. What will happen in goods and service market simultaneously? Explain this situation with relevant graph. Based on your findings in a) is it denoting long run equilibrium? If not, will the economy be able to restore…
9. If the MPC is greater than zero but less than one, then we can be sure that when disposable income rises by P1 consumption will: a. not be affected b. will rise by more than P1 c. will rise by less than P1 d. will rise by exactly P1.
The table below provides income and consumption data in billions of dollars: Disposable Income Consumption Savings 100 80 --- 200 150 --- What is the level of consumption when income is $300 billion? A) $200 billion B) $240 billion C) $210 billion D) $60 billion
ADVANCED ANALYSIS Suppose that the linear equation for consumption in a hypothetical economy is C = 60 + 0.75Y. Also suppose that income (Y) is $600. Determine the following values: Instructions: For parts a, b, d, and f, round your answers to 2 decimal places if necessary. For parts c and e, enter your answers as a whole number. a. MPC = b. MPS = c. Level of consumption = $ d. APC = e. Level of saving = $ f. APS =
The table below provides Income and consumption Data in billions of dollars. Answer questions below based on it.Disposable Consumption SavingsIncome100 80 --------200 150 --------- What is the level of consumption when income is $300 billion? Group of answer choices $200 billion $240 billion $210 billion $60 billion
16. Suppose that planned investment and planned government purchases do not depend on income:I = 15 and G = 17. Consumption, as you would expect, does depend on income via the consumption function C = 2 + 0.75Y – 0.75T. Net taxes are T = 12. Your friend thinks that the equilibrium will be where Y = 150 but he is wrong. What is the best description of this situation? a. the (Y, AE) point is above the 45 degree line, Y will adjust down b. the (Y, AE) point is above the 45 degree line, Y will adjust up c. the (Y, AE) point is below the 45 degree line, Y will adjust down d. the (Y, AE) point is below the 45 degree line, Y will adjust up 17. (continued) Help you friend by calculating the equilibrium income for the AE model in the previous question. Y = _____