Most stocks remain weak and investors seem pessimistic about other earnings as the economy remains fragile. Use the aggregate expenditure diagram to explain the following.
(15 marks – 3 marks each)
a)Suppose the weak stock market makes households to cut back on purchases of consumption goods. How would this affect equilibrium GDP
b)How could government use spending or taxes (separately, not together) to counteract the effect on equilibrium GDP in (a)? Does a given change in government spending (say$1billion) have the effect on GDP as the equivalent change in taxes? Why or why not?
c)Supplose the government does not want the budget surplus to change. How could the government use spending and taxes (together) to counteract the effect on GDP in (a)? Explain
d)How would a fall in marginal propensity to consume (MPC) affect the slope of the aggregate expenditure function? How would the spending multiplier be affected
e)Why is the real-world spending multiplier smaller than the simple multiplier discussed in this question?

Analysis 2023.xlsx Portal PlusPortals - Redike... G Dashboard Homework In-Class Assignmen... ASUS E-Service Razer Google Translate Homework #4-2 - A... Homework# 3-6 (A Download Pro Forma Analysis for CGX Transmitters, 2nd generation optical transmitter Assumptions 0 3 4 Price 11.50 Sales 18.400 27.600 33.350 9.200 Cost 4.20 COGS 6.720 10.080 12.180 3.360 Tax 0.34 Depreciation 5.000 5.000 5.000 5.000 Cost of Capital 9.5% Tax 2.271 4.257 5.498 0.286 Cash Flow from operations 4.409 8.263 10.672 0.554 Net Working Capital 1.100 2.700 4.400 2.500 0.000 Change in working capital 1.100 1.600 1.700 -1.900 -2.500 Capital Investment -25.000 R&D Costs -12.500 After tax Salvage Value 6.600 Side effects on 1st gen (after tax) -0.792 -0.792 -0.792 -0.792 Headquarter Costs (after tax) -0.545 -0.545 -0.545 -0.545 Compliance Costs (after tax) -0.116 -0.116 -0.116 -0.116 Net Cash Flow -36.400 4.557 8.511 7.320 3.202 NPV IRR Suggestion Decision Seresto ($15.83) -16.1% NO ALIENWARE ZO