Principles of Economics Plus MyLab Economics with Pearson eText (2-semester access) -- Access Card Package (12th Edition)
12th Edition
ISBN: 9780134426846
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 24, Problem 1.7P
Subpart (a):
To determine
Equilibrium.
Subpart (b):
To determine
Equilibrium.
Subpart (c):
To determine
Equilibrium.
Subpart (d):
To determine
Equilibrium.
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Q9. For each of the following sets of data, determine if output will need to increase, decrease, or remain the same to move the economy to equilibrium:
Y=1,000;C=100+0.75(Y-T);I=200;G=150;T=100
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
2. Y=5,000;C=200+0.9(Y-T);I=500;G=400;T=300…
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Q9. For each of the following sets of data, determine if output will need to increase, decrease, or remain the same to move the economy to equilibrium:
Y=1,000;C=100+0.75(Y-T);I=200;G=150;T=100
________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________________
2. Y=5,000;C=200+0.9(Y-T);I=500;G=400;T=300
If planned aggregate expenditure equals GDP, the economy is in macroeconomic equilibrium.
True
False
Chapter 24 Solutions
Principles of Economics Plus MyLab Economics with Pearson eText (2-semester access) -- Access Card Package (12th Edition)
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- Which of the following will cause the planned aggregate expenditure function to shift down? Group of answer choices A rise in the marginal propensity to consume. A rise in the marginal propensity to save. A rise in interest rate. A rise in government transfer payments.arrow_forwardIdentify the point or points for which the following is true: The economy cannot reach this point without an increase in resources or improvement in technologyarrow_forwardKeynesian economics predicts that if government policy makers deem current equilibrium real Gross Domestic Product (GDP) to be "too low," then an appropriate policy action would be to do nothing, because the economy is self-adjusting. raise government spending, thereby increasing aggregate demand and pushing up real Gross Domestic Product (GDP) with little or no inflationary consequences. increase taxes, thereby causing aggregate demand to increase and inducing a rise in real Gross Domestic Product (GDP) with little or no inflationary consequences. reduce the money stock, thereby causing aggregate demand to decrease and inducing a rise in fall in the price level that generates an increase in total planned expenditures.arrow_forward
- Answer the following questions, which relate to the aggregate expenditures model:a. If Ca is $100, Ig is $50, Xn is -$10, and G is $30, what is the economy’s equilibrium GDP?b. If real GDP in an economy is currently $200, Ca is $100, Ig is $50, Xn is -$10, and G is $30, will the economy’s real GDP rise, fall, or stay the same?c. Suppose that full-employment (and full-capacity) output in an economy is $200. If Ca is $150, Ig is $50, Xn is -$10, and G is $30, what will be the macroeconomic result?arrow_forwardIn 250 words or less, answer the following question. With reference to the multiplier process, discuss how a shock to an exogenous component of aggregate expenditure may lead to a larger than proportionate change in economic output in equilibrium.arrow_forwardDue to an increase in consumer wealth, there is a $40 billion autonomous increase in consumer spending in the economies of Westlandia and Eastlandia. Assuming that the aggregate price level is constant, the interest rate is fixed in both countries, and there are no taxes and no foreign trade, complete the accompanying tables to show the various rounds of increased spending that will occur in both economies if the marginal propensity to consume is 0.5 in Westlandia and 0.75 in Eastlandia. What do your results indicate about the relationship between the size of the marginal propensity to consume and the multiplier?arrow_forward
- Identify the direction of the change during a recession in each of the following: consumption expenditures, investment expenditures, and unemployment.arrow_forwardIn the simple Keynesian model, if aggregate expenditure is less than GDP, output will a)decline as firms increase their prices to stop the buildup of inventories b)increase as firms increase production to try to stop depletion of inventories c)remain unchanged indefinitely unless government takes action d)increase as firms cut their prices to try to stop depletion of inventories e)decline as firms cut production to stop the buildup of inventoriesarrow_forwardThe aggregate consumption function will shift upward if, all other things remaining the same, the marginal propensity to consume decreases. None of the choices given are correct the marginal propensity to save increases. disposable incomes increasearrow_forward
- Which of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.arrow_forwardGiven the data shown in the table below, if planned investment increased by $100, the new equilibrium GDP would be approximately ________.arrow_forwardIn the Keynesian cross, the economy is in equilibrium when planned expenditure equals actual expenditure. However, when planned expenditure exceeds actual expenditure, unplanned inventory investment is ________, causing output to ________. a. negative; fall b. positive; fall c. positive; rise d. negative; risearrow_forward
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