Exploring Macroeconomics
7th Edition
ISBN: 9781285859446
Author: Sexton, Robert L.
Publisher: Cengage Learning
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Question
Chapter 15, Problem 12P
To determine
To explain:
The change in the aggregate expenditure function and the equilibrium level of real GDP, if the economy is a net importer.
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What is the effect on aggregate expenditure if the values of exports exceeds the value of imports in a country
What is the effect on aggregate expenditure if the value of exports exceeds the value of imports in a country?
are savings and spending on imports included in aggregate expenditure?
Chapter 15 Solutions
Exploring Macroeconomics
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- what is The Aggregate Expenditure Modelarrow_forwardWhat is the difference between aggregate expenditure and aggregate demand? Why is the aggregate demand curve downward sloping while the aggregate expenditure line is upward sloping?arrow_forwardWhat will be the short-run effect of the shift in the reaction function on GDP?arrow_forward
- Given the following: consumption = 400, investment = 100, government expenditure = 50 and net export = 20, what is the economy’s equilibrium GDP?arrow_forwardIf a Japanese tourist drinks German beer in a hotel in New York City, how will the U.S. GDP be affected? Give your answer using both the expenditure approach and the output approach.arrow_forwardWhy is inventory investment counted as part of aggregate spending if it isn’t actually sold to the final enduserarrow_forward
- What is the aggregate expenditures function?arrow_forwardPeople sometimes argue that imports should be limited by government policy. Suppose a government quota on the quantity of imports causes net exports to rise. Using the circular flow diagram as a guide, explain why total expenditures and national output may rise after the quota in imposed. Who is likely to benefit from the quota? Who will be hurt?arrow_forwardWrite out and explain the GDP and Aggregate Expenditure identity equations.arrow_forward
- A $300 million decrease in investment spending will increase real GDP by more than $300 million. Is this a true statement? What is the relationship between investment spending and the GDP? I think that investment spending goes directly into the economy so I believe the answer to be true. But I am not sure.arrow_forwardAnswer the question on the basis of the following table for a particular country in which C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars. Each question is independent of other question using the same table, unless otherwise stated. Price Level C Ig G X M Real GDP 128 $18 $2 $3 $1 $5 125 $20 $4 $3 $2 $4 122 $22 $6 $3 $3 $3 119 $24 $8 $3 $4 $2 116 $26 $10 $3 $5 $1 Refer to the table. The real-balances effect of changes in the price level is: Group of answer choices shown by columns (1) and (5) of the table. shown by columns (1) and (4) of the table. not shown by the data in the table. shown by columns (1) and (2) of the table.arrow_forwardIs it true that the value of U.S. imports is added to exports when calculating U.S. GDP because imports reflect spending by Americans? Explain.arrow_forward
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