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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

  1. Answer the questions based on the table below. The values are in millions of dollars. (15pts)
  2. What is the equilibrium level of real GDP?
  3. What is the MPC?
  4. If potential GDP is $7,000 million, is the economy at full employment? If not, what is the condition of the economy?
  5. 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?

  1. 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. (10pts)

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