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Dont for get to label grapgh The following table shows consumption (C), investment (I), government spending (G), and net exports (X - M) in a
Dont for get to label grapgh
The following table shows consumption (C), investment (I), government spending (G), and net exports (X - M) in a hypothetical economy for various levels of real GDP (Y). Assume that the price level remains unchanged at all levels of income. All figures are in billions of dollars. Compute aggregate expenditures for each income level and fill in the last column In the following table. Y C I G X - M Aggregate Expenditures 500 300 150 200 -100 600 350 150 200 -100 700 400 150 200 -100 800 450 150 200 -100 900 500 150 200 -100 The following graph shows real GDP on the horizontal axis and aggregate expenditures (AE) on the vertical axis. The orange line (square symbols) represents a 45-degree (Y= AE) line. Use the blue points (circle symbol) to plot the aggregate expenditures line for this economy. Line segments will automatically connect the points. (? ) 1000 O 900 AE line 800 Equilibrium GDP REAL AGGREGATE EXPENDITURES (Billions of dollars) 700 600 500 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars)The following graph shows real GDP on the horizontal axis and aggregate expenditures (AE) on the vertical axis. The orange line (square symbols) represents a 45-degree (Y= AB) line. Use the blue points (circle symbol) to plot the aggregate expenditures line for this economy. Line segments will automatically connect the points. (?) 1000 O 900 AE line 300 Equilibrium GDP REAL AGGREGATE EXPENDITURES (Billions of dollars) 700 600 500 400 400 500 600 700 800 900 1000 REAL GDP (Billions of dollars) Place the black point (cross symbol) where the aggregate expenditures line intersects the 45-degree line. Dashed drop lines will automatically extend to both axes. The equilibrium output at this price level is equal to Suppose real GDP is currently $500 billion. Assuming the price level remains constant, this would mean that , which would send a signal to firms to The marginal propensity to consume (MPC) for this economy is and the spending multiplier for this economy is equal toThe Following table shows some information on a hypothetical economy. The table lists real GDP, consumption [C], investment [1), government spending (G), net exports [X - M), and aggregate expenditures [AE]. In this problem, assume that investment, government spending, and net exports are independent of the economy's real GDP level. :4 - Unplanned Inventory Direction of Real GDP and Real GDP E I G M AE Investment Employment $300 $150 $50 $?0 $?0 $40 $400 $50 $7'0 $7'0 $400 $0 $500 $2?0 $50 $?0 $?0 $40 $600 $50 $?0 $?0 $520 $00 $390 $50 $7'0 $7'0 $580 $120 Using the numbers provided in the table, enter the correct numbers in the empty cells. Then, using the dropdown selection menus in the right-most column, indicate whether output will tend to increase, decrease, or remain in equilibrium at each level of real GDP in the table. (Note: The table uses negative numbers to indicate an unplanned inventory investment depletion and positive numbers to indicate an unplanned inventory investment accumulation.) True or False: The most fundamental assumption behind the aggregate expenditures model is that prices in the economy are xed. True False When aggregate expenditures are less than real GDP, there is an unplanned inventory investment . This will prompt Firms to employment and production. The following graph shows the aggregate expenditures line (AE) for an economy where current equilibrium output is $400 billion and full-employment output is $250 billion. 800 45-degree line 700 AE AE 500 400 AGGREGATE EXPENDITURES (Billions of dollars) 300 200 100 Full-employment GDP 100 200 300 400 500 600 700 800 REAL GDP (Billions of dollars) The economy is experiencing a GDP gap with the absolute value of the gap equal to $ billion. To close the GDP gap would require = $ billion in government spending. Thus the spending multiplier for this economy isStep by Step Solution
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