Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Question
Chapter 28, Problem 9SPA
To determine
Identify the changes in the equilibrium expenditure if the price level remains 100.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
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.
If changes to expenditures include consumption at $2000, investment at $600, government spending at $500, exports are $100, imports are $200 and the mpc is 0.75, then:
the equilibrium income is $12,000
equilibrium income is $3000
the multiplier is 5
the slope of the AE curve is 0.25
Based on the following information:
C = 40 + 0.7Yd, T = Tg – R, I = 200, G = 350, Tg = 60, R = 40
calculate the equilibrium level of income (Ye).
calculate the value of kG, kTg and kR, where k is the multiplier..
calculate the values of C, S and T at Ye level.
calculate the new equilibrium level of income if I increases by 10 percent.
if G increases to 550 units and it is fully funded by the rise in T, what is the impact
on Ye?
if Tg increases to 85 units and R increases to 50 units, what is the effect on the
level of Ye?
Given the following information.
C = 600 + 0.8Yd , Yd = Y – T, Tg = 100, I= 200, R = 50, G = 350,
X = 250 and M = 200 + 0.1Y.
Calculate the equilibrium level of income (Ye).
Show the equilibrium level of income by using diagrams of both aggregate
expenditure-income (AE-Y) approach and injection-leakage approach,
How much investment should be increased if the government wants to increase
the national income by 2000?
How much tax has to be reduced so that…
Chapter 28 Solutions
Macroeconomics
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
Knowledge Booster
Similar questions
- can you please answer strating form D to F Given the information below, answer the questions that follow. C = $40 + 0.8Y 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? (Show all work) d) Assuming that the full employment level of output is $600, what kind of gap exists and how large is it? Explain e) If transfer payments increased by $10 and the price level did not change, what would the new equilibrium be? (Show all work) f) How would your answer to part (e) change if the price level did change?arrow_forwardIf national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC)What is the value of the multiplier? What is the value of the multiplier? Comment on the results in part (3) and (4).arrow_forwardFor 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: Multiplier: Short-run equilibrium output: There is (Click to select) an expansionary no a recessionary output gap in the amount of .Autonomous expenditure would need to (Click to select) increase decrease stay the same by to eliminate the output gap.arrow_forward
- Suppose that the consumer’s consumption demand function is given by Cd = 0.8(Y−T)+10. Investment is Id = 20, government expenditure is G = 10, and tax is T = 10. What is the equilibrium GDP (income)? Suppose that government expenditure increases by 10 units while tax is unchanged. How will GDP change? What is the multiplier? Suppose that government expenditure increases by 10 units while tax also increases by 10 units. How will GDP change? What is the multiplier?arrow_forwardConsider the following information about an economy. C=100+b(Y-50-0.25Y); I=50, G=50, X=10, M=5+0.1y, t=0.25Y, MPC=0.8 What is the effect of an increase in t of 0.3 on the equilibrium income and the multiplier?arrow_forwardAssume the simple spending multiplier equals 10. Determine the size and direction of any changes of the aggregate expenditure line, real GDP demanded, and the aggregate demand curve for each of the following: Spending rises by $8 billion at each spending level Spending falls by $5 billion at each income level Spending rises by $20 billion at each income levelarrow_forward
- Due 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_forwardGiven 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?arrow_forwardThe Italian government decides to stimulate the economy by sending checks worth $70 billion to Italian consumers. If the government spending multiplier is 1.5 , calculate the MPC to determine the final change in Italy's real GDP due to the transfer. Please give your answer as a whole number in billions of dollars. $ billion The Greek government decides to introduce new austerity measures, which reduce government direct spending by $16 billion. Greece has a marginal propensity to consume of 0.6 . What will be the final change in real GDP as a result of this decreased spending? Please give your answer as a whole number in billions of dollars. The Japanese government decides to stimulate the economy by increasing direct spending by $70 billion. If the final change in real GDP is $280 billion, what is Japanese consumers' marginal propensity to consume (MPC)? Please round your answer to two decimal placesarrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning