The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

Question

Consider an economy in which investment is $200, government purchases are $500, net exports are $30, and the price level is fixed. Taxes vary with income, and as a result, the consumption schedule looks like that shown in the following table. Fill in the missing values. Graph the aggregate expenditure graph using the above data. This is the graph with Aggregate Expenditures on the Y axis and Real GDP on the x axis. Start with a forty five degree line. Suppose that full employment comes at GDP=$1,480. Is the economy in an inflationary or recessionary gap? What action would you take to close the gap?

Answer 1

Question

Chapter 9.A, Problem 4TY

a)

To determine

To calculate: The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

b)

To determine

To Identify: Any recessionary or inflationary gap is there and is to be calculated.

c)

To determine

To describe: effects to the equilibrium GDP when investors become optimistic about country’s future and raise their investment to $600.

d)

To determine

To Identify: If any inflationary gap is occurred after increase in investment and is to be calculated.

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Consider an economy in which investment is $200, government purchases are $500, net exports are $30, and the price level is fixed. Taxes vary with income, and as a result, the consumption schedule looks like that shown in the following table. Fill in the missing values. Graph the aggregate expenditure graph using the above data. This is the graph with Aggregate Expenditures on the Y axis and Real GDP on the x axis. Start with a forty five degree line. Suppose that full employment comes at GDP=$1,480. Is the economy in an inflationary or recessionary gap? What action would you take to close the gap?

Answer 2

Question

Chapter 9.A, Problem 4TY

a)

To determine

To calculate: The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

b)

To determine

To Identify: Any recessionary or inflationary gap is there and is to be calculated.

c)

To determine

To describe: effects to the equilibrium GDP when investors become optimistic about country’s future and raise their investment to $600.

d)

To determine

To Identify: If any inflationary gap is occurred after increase in investment and is to be calculated.

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Answer 3

Question

Chapter 9.A, Problem 4TY

a)

To determine

To calculate: The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

b)

To determine

To Identify: Any recessionary or inflationary gap is there and is to be calculated.

c)

To determine

To describe: effects to the equilibrium GDP when investors become optimistic about country’s future and raise their investment to $600.

d)

To determine

To Identify: If any inflationary gap is occurred after increase in investment and is to be calculated.

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Answer 4

Question

Chapter 9.A, Problem 4TY

a)

To determine

To calculate: The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

b)

To determine

To Identify: Any recessionary or inflationary gap is there and is to be calculated.

c)

To determine

To describe: effects to the equilibrium GDP when investors become optimistic about country’s future and raise their investment to $600.

d)

To determine

To Identify: If any inflationary gap is occurred after increase in investment and is to be calculated.

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Answer 5

Chapter 9.A, Problem 4TY

a)

To determine

To calculate: The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

b)

To determine

To Identify: Any recessionary or inflationary gap is there and is to be calculated.

c)

To determine

To describe: effects to the equilibrium GDP when investors become optimistic about country’s future and raise their investment to $600.

d)

To determine

To Identify: If any inflationary gap is occurred after increase in investment and is to be calculated.

Answer 6

Chapter 9.A, Problem 4TY

a)

To determine

To calculate: The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

Answer 7

Chapter 9.A, Problem 4TY

a)

To determine

To calculate: The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

Answer 8

b)

To determine

To Identify: Any recessionary or inflationary gap is there and is to be calculated.

Answer 9

b)

To determine

To Identify: Any recessionary or inflationary gap is there and is to be calculated.

Answer 10

c)

To determine

To describe: effects to the equilibrium GDP when investors become optimistic about country’s future and raise their investment to $600.

Answer 11

c)

To determine

To describe: effects to the equilibrium GDP when investors become optimistic about country’s future and raise their investment to $600.

Answer 12

d)

To determine

To Identify: If any inflationary gap is occurred after increase in investment and is to be calculated.

Answer 13

d)

To determine

To Identify: If any inflationary gap is occurred after increase in investment and is to be calculated.

Answer 14

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Answer 25

Ch. 9.A - Prob. 1TY Ch. 9.A - Prob. 2TY Ch. 9.A - Prob. 3TY Ch. 9.A - Prob. 4TY Ch. 9.A - Prob. 5TY Ch. 9.A - Prob. 1DQ Ch. 9.A - Prob. 2DQ Ch. 9.B - Prob. 1TY Ch. 9.B - Prob. 2TY Ch. 9.B - Prob. 3TY

The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

Solution Summary: The author explains that GDP is the market value of all finished goods produced in a country. The equilibrium GDP in an economy is 2,800.

To calculate: The equilibrium GDP of an economy with income $500, net exports is zero and tax is $200.

To Identify: Any recessionary or inflationary gap is there and is to be calculated.

To describe: effects to the equilibrium GDP when investors become optimistic about country’s future and raise their investment to $600.

To Identify: If any inflationary gap is occurred after increase in investment and is to be calculated.

Chapter 9 Solutions