PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
7th Edition
ISBN: 9781260110920
Author: Frank
Publisher: MCG
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Question
Chapter 13.A, Problem 13A.1CC
To determine
The intercept and slope of the expenditure line.
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Consider the economy described by the following equations:
C
= 1,600 + 0.9 (Y – T)
I p
= 800
G
= 1,600
NX
= 200
T
= 1,600
Y*
= 29,000
a. Complete the table shown below to find short-run equilibrium output. Consider possible values for short-run equilibrium output as they are given in the table below.Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.
OutputY
Planned aggregate expenditure (PAE)
Y – PAE
Y = PAE?
27,200
(Click to select) Yes No
27,400
(Click to select) No Yes
27,600
(Click to select) No Yes
27,800
(Click to select) No Yes
28,000
(Click to select) No Yes
b. Short-run level of equilibrium output: c. What is the output gap for this economy? Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. The actual unemployment rate should…
For the following economy, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. By how much would autonomous expenditure have to change to eliminate the output gap?
C
= 550 + 0.75 (Y – T )
I p
= 200
G
= 200
NX
= 60
T
= 180
Y*
= 3,400
Instructions: Enter your responses as absolute numbers. Autonomous expenditure: 875Multiplier: 4Short-run equilibrium output: 3500 There is (Click to select) an expansionary output gap in the amount of 100.(DO THIS PART) Autonomous expenditure would need to decrease by________ to eliminate the output gap.
In an economy, autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. The marginal propensity to consume is 0.7 and net taxes are $250 billion. Exports are $500 billion and imports are $450 billion. Assume that net taxes and imports are autonomous and the price level is fixed.
What is the consumption function?
What is the equation of the AE curve?
Calculate equilibrium expenditure.
Calculate the multiplier.
If investment decreases to $150 billion, what is the change in equilibrium expenditure?
Describe the process in part (e) that moves the economy to its new equilibrium expenditure.
Chapter 13 Solutions
PRINCIPLES OF MACROECONOMICS(LOOSELEAF)
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- For the following economy, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. By how much would autonomous expenditure have to change to eliminate the output gap? C = 2,500 + 0.75 (Y – T ) I p = 1,500 G = 2,000 NX = 300 T = 1,500 Y* = 19,900 Instructions: Enter your responses as whole numbers. Autonomous expenditure: 5175Multiplier: 4Short-run equilibrium output: 20,700Output gap: (DO THIS PART)Autonomous expenditure would need to (Click to select) decrease increase by ____________to eliminate the output gap. (DO THIS PARTarrow_forwardThe table below shows aggregate expenditure in the short-run, answer the following questions in the spaces provided below Aggregate output (Y) C I G Aggregate Expenditure AE 0 20 30 10 100 100 30 10 200 180 30 10 300 260 30 10 400 340 30 10 500 420 30 10 600 500 30 10 700 580 30 10 1 What is the value of MPC 2 What is the value of MPS 3 What is the value of autonomous consumption (Ca) 4 Write the consumption function 5 What is the amount of equilibrium consumption 6 What is the amount of saving when Y = 200 7 What is the amount of autonomous expenditure 8 What is the amount of equilibrium expenditure 9 What is the size of expenditure Multiplier 10 What is the value of unplanned inventory when Y = 350arrow_forwardQ.1.15 Induced consumption is: (a) the part of consumption which is independent of the level of income.(b) the minimum level of consumption that is financed from sources other than income.(c) The maximum level of consumption that is financed from sources other than income.(d) shown by the slope of the consumption function.Q.1.16 In the Keynesian model, an introduction of a proportional tax will: (a) increase the slope of the consumption function.(b) reduce the multiplier.(c) increase the equilibrium level of income.(d) increase the multiplier.Q.1.17 A decrease in the price level will: (a) shift the AS curve to the left.(b) shift the AD curve to the left.(c) shift the AS curve to the right.(d) leave both the AD curve and the AS curve unchanged. Q.1.18 During(a) increases, increasesan economic expansion, real GDP ____ and unemployment ____. (b) increases, decreases(c) decreases, increases(d) decreases,…arrow_forward
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