Macroeconomics
13th Edition
ISBN: 9780134744452
Author: PARKIN, Michael
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Question
Chapter 11.4, Problem 4RQ
To determine
Explain the effect of an increase in autonomous expenditure on the real
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
It is assumed that everything else stays constant.
The economy has Consumption $90, Investment spending $100, Government expenditure on goods and services $80, Tax revenues $50, Exports $50, Imports $60. And marginal propensity to consume is assumed to be 0.7.
When the potential output of the economy (or long run output) is $250, what should be government spending in order to close an output gap?
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.
probably decrease by $50 billion, but it depends on the change in aggregate supply
D.
increase by exactly $50 billion because investment is a component of aggregate demand
Answer the questions below based on the graph.
What is the value of autonomous expenditures?
What is the marginal propensity to consume?
What is the slope of the AE line?
When income is $3,000, what are the expenditures?
Chapter 11 Solutions
Macroeconomics
Ch. 11.1 - Prob. 1RQCh. 11.1 - Prob. 2RQCh. 11.1 - Prob. 3RQCh. 11.2 - Prob. 1RQCh. 11.2 - Prob. 2RQCh. 11.2 - Prob. 3RQCh. 11.2 - Prob. 4RQCh. 11.3 - Prob. 1RQCh. 11.3 - Prob. 2RQCh. 11.3 - Prob. 3RQ
Ch. 11.4 - Prob. 1RQCh. 11.4 - Prob. 2RQCh. 11.4 - Prob. 3RQCh. 11.4 - Prob. 4RQCh. 11 - Prob. 1SPACh. 11 - Prob. 2SPACh. 11 - Prob. 3SPACh. 11 - Prob. 4SPACh. 11 - Prob. 5SPACh. 11 - Prob. 6SPACh. 11 - Prob. 7SPACh. 11 - Prob. 8SPACh. 11 - Prob. 9SPACh. 11 - Prob. 10SPACh. 11 - Prob. 11SPACh. 11 - Prob. 12SPACh. 11 - Prob. 13SPACh. 11 - Prob. 14SPACh. 11 - Prob. 15APACh. 11 - Prob. 16APACh. 11 - Prob. 17APACh. 11 - Prob. 18APACh. 11 - Prob. 19APACh. 11 - Prob. 20APACh. 11 - Prob. 21APACh. 11 - Prob. 22APACh. 11 - Prob. 23APACh. 11 - Prob. 24APACh. 11 - Prob. 25APACh. 11 - Prob. 26APACh. 11 - Prob. 27APACh. 11 - Prob. 28APACh. 11 - Prob. 29APACh. 11 - Prob. 30APACh. 11 - Prob. 31APACh. 11 - Prob. 32APACh. 11 - Prob. 33APACh. 11 - Prob. 34APA
Knowledge Booster
Similar questions
- Give an example of a change in autonomous spending that took place during 2000-2010.arrow_forwardWhat would an increase in planned investment increases real GDP, but an unplanned increase in inventory investment decrease real GDP in the aggregate expenditure model?arrow_forwardSuppose actual real GDP is $13.37 trillion, potential real GDP is $12.33 trillion, and the marginal propensity to consume is 0.62. If we ignore price effects, by how many trillions of dollars should the government change its spending to fix the gap? (Round this to two digits after the decimal and enter this value as either a positive value or a negative value without the dollar sign.)arrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
- Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
- Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning