10 The graph below shows an economy where the full-employment level of real output {real GDFP) is $2,000. 2 Aggregate Expenditures Model points Aggregate Expenditures (dollars) 5,000 g 4,500 eBook 4})00 ..................................................... v 0 3,500 References 3,000 2,500 2,000 feresmsrrimnrnnes 1,500 1,000 500 O fressassisnsanrsninnansnes 1,000 2000 3,000 4,000 5000 Real GDP (dollars) a. According to the graph, this economy is currently experiencing |a recessionary gap of $2,000 +| . b. Show the shift in the aggregate expenditures schedule that establishes the full-employment level of output at $2,000. Instructions: Drag the line "AE" to establish the full-employment level of output at $2,000. c. To restore the full-employment level of real output, aggregate expenditures must be | decreased by ~|%& a. Suppose net exports increase by $2,000. Use the graph, show what happens to the equilibrium level of output (real GDP). Instructions: Drag the line "AE" from its original location to its new location after the increase in net exports. Indicate the new equilibrium level of output by dragging the equilibrium point from its original location to its new location corresponding to the new "AE" line. Equilibrium Dynamics Aggregate Expenditures (dollars) 14,000 13,000 12,000 11,000 10,000 9,000 8,000 7,000 6,000 |fusmurmsumansnnan ' 5,000 i 4,000 3,000 2,000 1,000 - .-0 40 * % % % % % % %% % Real GDP (dollars) Instructions: In parts b and d, enter your answers as a whole number. In part , round your answer to one decimal place. b. The $2,000 increase in net exports will immediately create an extra $2,000 in income, and some of the additional income will be spent. What will the increase in expenditures be as a result of the $2,000 increase in income? b. The $2,000 increase in net exports will immediately create an extra $2,000 in income, and some of the additional income will be spent. What will the increase in expenditures be as a result of the $2,000 increase in income? $ c. Using your answer in part b, or by computing the slope of the AE line above, what is the marginal propensity to consume for this nation? d. Using the graph, determine the equilibrium level of output before and after the $2,000 increase in net exports. Before: $[ ] After $[ ] This suggests a multiplier effect of