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Real GDP Consumption Planned Investment Government Purchases Net Exports $5,000 $4,500 $500 $325 -125 6,000 5,300 $500 $325 -125 7,000 6,100 $500 $325 -125 8,000
Real GDP | Consumption | Planned Investment | Government Purchases | Net Exports |
$5,000 | $4,500 | $500 | $325 | -125 |
6,000 | 5,300 | $500 | $325 | -125 |
7,000 | 6,100 | $500 | $325 | -125 |
8,000 | 6,900 | $500 | $325 | -125 |
- Answer the questions based on the table below. The values are in millions of dollars.
- What is the equilibrium level of real GDP?
- What is the MPC?
- If potential GDP is $7,000 million, is the economy at full employment? If not, what is the condition of the economy?
- If the economy is not at full employment, by how much should government spending increase so that the economy can move to the full employment level of GDP?
- Suppose autonomous consumption in an economy is $3 trillion, the MPC is 0.8, government spending is $700 billion, investment equals $600 billion, and net exports equal -100 billion. Calculate the equilibrium output value for this economy.
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