LO4, LO5

a. Find a numerical equation relating planned aggregate expenditure to output.

b. Construct a table to find the value of short-run equilibrium output. (Hint:

The economy is fairly close to full employment.)

c. By how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have to change? Show the effects of these fiscal policy changes in a Keynesian cross diagram.

d. Repeat part c assuming that Y* 630.

e. Show your results for parts b through d on a Keynesian cross diagram.

8.*For the following economy, find autonomous expenditure, the multiplier, shortrun equilibrium output, and the output gap. By how much would autonomous expenditure have to change to eliminate the output gap?

Illustrate this economy’s short-run equilibrium on a Keynesian cross diagram.

LO3, LO4, LO5 9.*An economy has zero net exports. Otherwise, it is identical to the economy described in problem