1. Income - Expenditure Problem: (Modules 28 & 29) Below is the data for an income-expenditure model. Use the table below to answer the following questions. Assume that taxes, government purchases and net exports are all $0. Remember that prices are fixed in the income-expenditure model, so we don't have to worry about them changing in this model. a. (2 pts.) Complete the table. Use the following formulas: AEplanned = C + planned GDP = AEplanned + Junplanned Of Junplanned = GDP - AEplanned Also remember that AAAEplanned can be a change in A or a change in Iplanned- GDP YD C Iplanned |AEplanned |lunplanned 0 0 50 100 300 300 275 100 600 600 500 100 900 900 725 100 1200 1200 950 100 1500 1500 1175 100 1800 1800 1400 100 2100 2100 1625 2400 2400 1850 100 b. (2 pts.) Find the MPC for this economy. Remember that A means change, and MPC = - A in consumption Ain disposable income Also remember to find the change in consumption, calculate how much C changes from one row to the next. Use the same two rows to calculate the change in YD. Show your work for full credit. c. Find "A" and "MPC" and plug them in to write out the aggregate consumption function, C = A + MPC x YD. (Hint: You will leave C and YD in your equation as is, and you will find numbers for MPC and A. Remember that YD stands for disposable income and A is autonomous consumer spending. We can also say that A is the amount of consumption when YD = 0. (look in the first row of numbers. You've already found the MPC and you can find A in the table.)d. For the table in part a., what is the value at Y', the \"income - expenditure equilibrium\" GDP? {The level of GDP when income equals spending. You should be able to see it in your completed table, and if vou like algebra, you can solve it with algebra} c. What is the value of the Multiplier? The formula for the multiplier is: multiplier = 1 \"ch f. {4 pts.} If planned investment spending increases BY $150 billion from what it was in part a.. what will be the new 1"\"? {Note there is a difference between something "increasing by\" and "increasing to\".} Fill in the three emptv columns in the table and then find Y'. -- ............. I] CI 300 300 EDD 6m 900 90'] T25 1200 1200 950 1500 1500 1175 mm -m 2"\" --- 2400 1400 1350 g. {2 pts.}Also verify your answer in partf. by using the iormulas (M = multiplier x MAEFMWH) and {new Y" = o|d Y" + M} Old Y' was calculated in part d. Show your work for full credit. h. (4 pts.) Note that we have reset the Iplanned to 100 in the table below. Suppose autonomous consumer spending increases by $100 billion. Fill in column C. (Hint: "A" increases from what you calculated in part c by $100 billion. Note that you'll have to calculate the rest of the numbers in column C), Based on what you see in the table, what do you think will be the new Y*? GDP YD C Iplanned | AEplanned |lunplanned 0 0 100 300 300 100 600 600 100 900 900 100 1200 1200 100 1500 1500 100 1800 1800 100 2100 2100 100 2400 2400 100 i. (2 pts.) Verify your answer to part h. by using the formulas (AY = multiplier x AAAEplanned) and (new Y* = old Y* + AY) to calculate the new Y". Show your work