EBK ECONOMICS
13th Edition
ISBN: 8220106799642
Author: PARKIN
Publisher: PEARSON
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Chapter 28, Problem 9SPA
To determine
Identify the changes in the equilibrium expenditure if the
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In an economy, autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. Exports are $500 billion and imports are $450 billion. Assume that net taxes and imports are autonomous and price level is fixed.
a)What is the consumotion function?
b)What is the equation of the aggregate expenditure curve?
c)Calculate equilibrium expenditure.
d)Calculate the multiplier.
e)If investment decreases to $150 billion, what is the change in equilibrium expenditure ?
equilibrium is important in the simple expenditure model so we need to know the following: what is the signal or indicator in the economy that will tell us we are not in equilibrium? What value for that signal will assure us we are in equilibrium? Explain why.
( Please solve whole question ASAP . I will definitely Rate your answer )
Given the information below, answer the questions that follow.
C = $40 + 0.75Y I = $30 G = $40 X – M = $10
a) What is the equilibrium GDP? Explain why $550 is not the equilibrium.
b) What is the marginal propensity to consume (MPC) in this question? (Explain)
c) What is the multiplier in this question and explain the significance of the multiplier?
Chapter 28 Solutions
EBK ECONOMICS
Ch. 28.1 - Prob. 1RQCh. 28.1 - Prob. 2RQCh. 28.1 - Prob. 3RQCh. 28.2 - Prob. 1RQCh. 28.2 - Prob. 2RQCh. 28.2 - Prob. 3RQCh. 28.2 - Prob. 4RQCh. 28.3 - Prob. 1RQCh. 28.3 - Prob. 2RQCh. 28.3 - Prob. 3RQ
Ch. 28.4 - Prob. 1RQCh. 28.4 - Prob. 2RQCh. 28.4 - Prob. 3RQCh. 28.4 - Prob. 4RQCh. 28 - Prob. 1SPACh. 28 - Prob. 2SPACh. 28 - Prob. 3SPACh. 28 - Prob. 4SPACh. 28 - Prob. 5SPACh. 28 - Prob. 6SPACh. 28 - Prob. 7SPACh. 28 - Prob. 8SPACh. 28 - Prob. 9SPACh. 28 - Prob. 10SPACh. 28 - Prob. 11SPACh. 28 - Prob. 12SPACh. 28 - Prob. 13SPACh. 28 - Prob. 14SPACh. 28 - Prob. 15APACh. 28 - Prob. 16APACh. 28 - Prob. 17APACh. 28 - Prob. 18APACh. 28 - Prob. 19APACh. 28 - Prob. 20APACh. 28 - Prob. 21APACh. 28 - Prob. 22APACh. 28 - Prob. 23APACh. 28 - Prob. 24APACh. 28 - Prob. 25APACh. 28 - Prob. 26APACh. 28 - Prob. 27APACh. 28 - Prob. 28APACh. 28 - Prob. 29APACh. 28 - Prob. 30APACh. 28 - Prob. 31APACh. 28 - Prob. 32APACh. 28 - Prob. 33APACh. 28 - Prob. 34APA
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- In an economy investment expenditure increased by 20 billion and the marginal propensity to consume is 0.1 calculate the increase in incomearrow_forwardin an economy C is equal to 300+0.5 Y and I= Rs.600 where C is consumption and Y is income calculate (a) equilibrium level of income (b) the consumption expenditure at equilibrium level of an income.arrow_forwardAs the marginal propensity to consume (MPC) increases, As the marginal propensity to save (MPS) increases, the multiplier the multiplier remains the same. remains the same. decreases. decreases. increases. increases. If the marginal propensity to consume is 0.40, what is the multiplier, assuming there are no taxes or imports? Round to the tenths place. Given the multiplier that you calculated, by how much will gross domestic product (GDP) increase when there is a $1,000 increase in government spending? Give your answer to the nearest whole number. %24arrow_forward
- i need the answer quicklyarrow_forwardWhen the price level falls A) the slope of the aggregate expenditures curve changes. B) the aggregate expenditure curve remains constant. C) the aggregate expenditures curve shifts down. D) the aggregate expenditures curve shifts uparrow_forwardAs the marginal propensity to consume (MPC) increases, As the marginal propensity to save (MPS) increases, the multiplier the multiplier remains the same. increases. decreases. decreases. increases. remains the same. If the marginal propensity to consume is 0.30, what is the multiplier, assuming there are no taxes or imports? Round to the tenths place.arrow_forward
- In an economy S = -60 + 0.2Y and the invesment is 5000 calculate the 1)Equilibrium level of the income 2)Consumption expenditure at equilibriumarrow_forwardSuppose that country Y is identical to country Z, with the exception that country Y's population has a lower marginal propensity to consume than country Z. Initially, both countries have the same level of real GDP. The diagram shows the expenditure curve for country Y. Using the line drawing tool, draw the expenditure curve of country Z in Figure 1. Label your curve 'Ez'. Carefully follow the instructions above and only draw the required object. Figure 1 Planned Expenditure ($, trillions) Real GDP, Y ($, trillions) Ex Select ✓ Linearrow_forwardWhich of the following is a true statement about the multiplier? The multiplier rises as the MPC rises. The smaller the MPC, the larger the multiplier. The multiplier is a value between zero and one. The multiplier effect does not occur when autonomous expenditure decreases.arrow_forward
- 1) If investment spending depends on GDP, this is called induced investment? T/F 2) A change in the price level will cause a shift in the expenditure schedule. T/F 3) A decrease in the price level causes a lower equilibrium quantity demanded? T/Farrow_forwardMonica's current income went up from $100.000 to $105,000 and she increased her current consumption by $2100. What is her marginal propensity to consume?arrow_forwardConsider an economy where the various components of expenditure follow these equations: C = 10 + 0.8Yd I = 500 G = 100 X = 300 М — 0.1Y T = 0.1Y c. Calculate the equilibrium level of GDP in this economy, highlighting what are the values of the Keynesian multiplier and the autonomous components of expenditure.arrow_forward
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