Economic Expenditures

Disposable Income=GDP Consumption Ig G X M

$50000 $70000 $9500 $8500 $6000 $18000

$100000 $100000 $9500 $8500 $6000 $24000

$150000 $130000 $9500 $8500 $6000 $30000

$200000 $160000 $9500 $8500 $6000 $36000

$250000 $190000 $9500 $8500 $6000 $42000

Complete parts a, b, c, d, e, and f.

a. Solve for net exports and aggregate expenditures at every level of GDP and determine the equilibrium level of GDP.

b. If potential GDP equals $400,000, based upon the equilibrium GDP value from part a, solve for the size of the recessionary gap.

c. If taxes =0.02Y, where Y represents GDP, solve for the cyclical budget deficit.

d. Suppose that foreign tastes for American made goods and services increase, causing the value of X to increase by $78000 in each row, so that it now equals $84000. Solve for the new equilibrium GDP that will result from this change.

e. Solve for the actual multiplier.

f. Solve for the simple multiplier.