Macroeconomics W/connect+learnsmart>ip<
20th Edition
ISBN: 9781308140032
Author: McConnell
Publisher: MCG/CREATE
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Question
Chapter 11.2, Problem 1QQ
To determine
Slope of aggregate expenditure schedule.
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Students have asked these similar questions
The table shows real GDP, Y, consumption expenditure, C, investment, /,
government expenditure on goods and services, G, exports, X, imports, M, and
aggregate planned expenditure, AE, in trillions of dollars. Taxes are constant.
If government expenditure increases to $1.2 trillion but other things remain
the same, what is equilibrium expenditure and what is the multiplier?
>>> Answer to 1 decimal place.
The new equilibrium expenditure is $
trillion.
Planned expenditure
Y
C
G
X
M
AE
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0.4
1.4
0.4
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3.2
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0.4
1.0
0.8
5.6
6
5.2
1.4
0.4
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S
6.8
8
6.8
R
0.4
1.0
1.6
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1.4
0.4
1.0
2.0
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1.4
0.4
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10.4
Multiplier Effect
a. During a recessionary gap, is the goal to increase or decrease the equilibrium
GDP? Will the change in spending be greater than, less than or equal to the
change in the equilibrium GDP?
b.
c.
In a given economy with an MPC of 0.8, the equilibrium GDP equals $630,000.
If G increases by $70000, solve for the new equilibrium GDP that will result.
In a given economy, with an equilibrium GDP of $280,000 both government
purchases and taxes increase by $10,000. Solve for the new equilibrium GDP
that will result from these two changes.
Assume an economy where spending for each sector is:
Household: C = 800 + 0.95Q
Business: I = 3000
Public: G = 4000, Tr = 7000, Tx = 1000 + 0.3Q
Foreign: X = 1700, Im = 200 + 0.165Q
Solve for Autonomous Spending, Spending Multiplier, Disposable Income, Consumption Expenditure, Household Savings, Imports, Net Exports, Government Expenditure, Budget Deficit
Chapter 11 Solutions
Macroeconomics W/connect+learnsmart>ip<
Ch. 11.2 - Prob. 1QQCh. 11.2 - Prob. 2QQCh. 11.2 - Prob. 3QQCh. 11.2 - Prob. 4QQCh. 11.7 - Prob. 1QQCh. 11.7 - Prob. 2QQCh. 11.7 - Prob. 3QQCh. 11.7 - Prob. 4QQCh. 11 - Prob. 1DQCh. 11 - Prob. 2DQ
Ch. 11 - Prob. 3DQCh. 11 - Prob. 4DQCh. 11 - Prob. 5DQCh. 11 - Prob. 6DQCh. 11 - Prob. 7DQCh. 11 - Prob. 8DQCh. 11 - Prob. 1RQCh. 11 - Prob. 2RQCh. 11 - Prob. 3RQCh. 11 - Prob. 4RQCh. 11 - Prob. 5RQCh. 11 - Prob. 6RQCh. 11 - Prob. 7RQCh. 11 - Prob. 8RQCh. 11 - Prob. 9RQCh. 11 - Prob. 1PCh. 11 - Prob. 2PCh. 11 - Prob. 3PCh. 11 - Prob. 4PCh. 11 - Prob. 5PCh. 11 - Prob. 6PCh. 11 - Prob. 7PCh. 11 - Prob. 8PCh. 11 - Prob. 9PCh. 11 - Prob. 10P
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- The table below shows data for three fictitious countries. a. Compute the current MPC for each country. Instructions: Round your answers to two decimal places. Income and Consumption Data, Three Countries Change in Income (dollars) $8,900 30,400 5,120 Change in Consumption (dollars) $4,461 18,750 3,840 Country Adrup Bedrup Cedrup b. Which country has the highest marginal propensity to save (MPS)? (Click to select) c. If income in Bedrup increases by $240 and income in Cedrup increases by $480, which of the following statements is correct? MPC O Neither Bedrup nor Cedrup will save any dollars. O Bedrup will save more dollars. Cedrup will save more dollars. O Dollar savings will be the same for both Bedrup and Cedrup.arrow_forwardAggregate expenditure is 790. Income is 730 and consumption is 720, income increases to 750 and consumption increases to 736. There is an increase in consumer spending of 3. What will the MPC be What will the MPS be What will the multiplier be What will the new level of aggregate expenditure be You must show all work you must take all steps and it must be done in a neat well organized easy to follow manner.arrow_forwardGiven an economy is currently producing at $1.47 GDP, natural rGDP is $1.67, and the MPC is 0.94, then the multiplier for increases in aggregate expenditures is: A (round to ane decimal point). This means the federal government should increase its expenditures by A (whole number) billion dollars.arrow_forward
- Calculate the Marginal Propensity to Consume and the Marginal Propensity to Save. Fill in the blanks in the following table. Show that the MPC plus the MPS equals 1. National Income & Real GDP (Y) Consumption (C) Saving (S) MPC MPS $9,000 $8,000 $10,000 $8,600 $11,000 $9,200 $12,000 $9,800 $13,000 $10,400arrow_forwardCalculate MPC when a change in investment spending of 40 million leads to an increase in real GDP by 160 million.arrow_forwardIf an economy’s spending multiplier is equal to 4, what is its MPC and MPS?arrow_forward
- Consider an economy of a nation that has the following aggregate expenditure. 1300- 1040- 780- 520- AE 260 Y = AE 260 390 520 650 780 9ło 1040 1170 1300 130 Real GDP Note: Please make sure your final answers are accurate to 2 decimal places. a) What is the value of the equilibrium national real GDP? Equilibrium = $0 b) What is the value of the multiplier? Multiplier = 0 c) If the autonomous consumption were to decrease by $520, what would be the new value of equilibrium real GDP? New equilibrium = S0 Aggregate expendituresarrow_forwardThe the expenditures multiplier effect, the spending to bring about a given amount of increase in real GDP. smaller; larger smaller: smaller larger: larger larger: faster the change needed in governmentarrow_forwardThe table below shows data for three fictitious countries. a. Compute the current MPC for each country. Instructions: Round your answers to two decimal places. Income and Consumption Data, Three Countries Change in Income (dollars) $9,830 40,000 5,870 Change in Consumption (dollars) $6,789 31,650 5,500 b. Which country has the highest marginal propensity to save (MPS)? (Click to select) c. If income in Bedrup increases by $360 and income in Cedrup increases by $690, which of the following statements is correct? Country Adrup Bedrup Cedrup MPC O Neither Bedrup nor Cedrup will save any dollars. O Cedrup will save more dollars. O Bedrup will save more dollars. O Dollar savings will be the same for both Bedrup and Cedrup.arrow_forward
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