Consider the economy described by the following equations: C= 1,600 + 0.9 (Y – T)I p= 800G= 1,600NX= 200T= 1,600Y*= 29,000a. Complete the table shown below to find short-run equilibrium output. Consider possible values for short-run equilibrium output as they are given in the table below.Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. OutputYPlanned aggregate expenditure (PAE)Y – PAEY = PAE?27,200 (Click to select) Yes No 27,400 (Click to select) No Yes 27,600 (Click to select) No Yes 27,800 (Click to select) No Yes 28,000 (Click to select) No Yes b. Short-run level of equilibrium output: c. What is the output gap for this economy? Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. The actual unemployment rate should be rounded to two decimal places. Output gap: where Y* = 29,000If the natural rate of unemployment is 5 percent, what is the actual unemployment rate for this economy (use Okun’s law given Y* = 29,000). Actual unemployment rate: %

C = 1,600 + 0.9 (Y – T) I p = 800 G = 1,600 NX = 200 T = 1,600 Y* = 29,000

Answered: Consider the economy described by the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the economy described by the following equations:

C	= 1,600 + 0.9 (Y – T)
I ^p	= 800
G	= 1,600
NX	= 200
T	= 1,600
Y*	= 29,000

a. Complete the table shown below to find short-run equilibrium output. Consider possible values for short-run equilibrium output as they are given in the table below.

Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers.

OutputY	*Planned aggregate expenditure (PAE)*	Y – PAE	Y *= PAE?*
27,200			(Click to select) Yes No
27,400			(Click to select) No Yes
27,600			(Click to select) No Yes
27,800			(Click to select) No Yes
28,000			(Click to select) No Yes

b. Short-run level of equilibrium output:

c. What is the output gap for this economy?

Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. The actual unemployment rate should be rounded to two decimal places.

Output gap:    where Y* = 29,000

If the natural rate of unemployment is 5 percent, what is the actual unemployment rate for this economy (use Okun’s law given Y* = 29,000).

Actual unemployment rate:    %

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