Economics For Today
Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
Question
Chapter 19, Problem 1SQ
To determine

The formula to calculate the aggregate expenditure.

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  • A country has an initial real output of $162 Billion. What would the final output be expected to be if:a. The government spends $15 billion on infrastructure and the MPC of the country is 0.35b. The government reduces taxes by $3.5 billion and the MPW of the country is 0.75c. The government makes no changes to taxes or spending.d. The government decreases spending nationwide by $9 billion in a country where people are likely to withdraw 60 cents on every new dollar of income.
    In an economy with no government and no foreign sectors, autonomous consumer spending is $250  billion, planned investment spending is $350 billion. Suppose that in general, consumers save a third of  any additional disposable income they have.  Plot the aggregate consumption function and planned aggregate spending.
    The rate of output and planned expenditures for the economy of Timbuktu are shown in the following table:               Total Output              Planned Aggregate Expenditures                                                                  (Two-Sector Economy)(Real GDP in billion dollars)                          (in billions)                   5,000                                                5,250                   5,500                                                5,500                   6,000                                                5,750                   6,500                                                6,000                   7,000                                                6,250a)  How much will be the equilibrium level of output/income if there will be an autonomous increase in investment of $250 billion?
  • The rate of output and planned expenditures for the economy of Timbuktu are shown in the following table:               Total Output                                                    Planned Aggregate Expenditures (Two-Sector Economy)(Real GDP in billion dollars)                                                                               (in billions)                   5,000                                                                                                         5,250                   5,500                                                                                                         5,500                   6,000                                                                                                         5,750                   6,500                                                                                                         6,000                   7,000…
    Suppose GDP is Rs.10.3 trillion, taxes are Rs.1.8 trillion, private saving is Rs.1.2 trillion, and public saving is Rs.0.2 trillion. Assuming this economy is closed, calculate consumption,  government purchases,  national saving,  investment
    Assume that total expenditure E comprises the sum of government consumption, G, household consumption, C, and investment, I. Assume a closed macroeconomic system, so that income equals expenditure Y=E. If we define household saving, SH, as SH=Y-T-C, where the cunsumption function is a fixed proportion of disposable income, C=c(Y-T), which of the following will be true? a. Higher government spending alongside unchanged taxation will lead to higher investment and higher household saving b. Higher government spending alongside unchanged taxation will have no effect on household saving or investment c. Higher government spending alongside unchanged taxation will lead to higher household saving d. Higher government spending alongside unchanged taxation will lead to lower household saving
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