Consider the macroeconomic model shown below: C 150+0.50Y | = 100 G = 100 NX = 25 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. (Round your responses to the nearest dollar.) GDP $375 Aggregate Expenditures (AE) Unplanned Change in Inventories $1,125
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- Given the macro economic data below, draw a graph to illustrate if there is arecessionary gap in the given economy.Real GDP $1000BConsumption (100K is Autonomous) $600BInvestment $100BGovernment Spending $200BExport $50BImport $50BMarginal Propensity to Consume 0.50 AD (Expenditure) 45 degree AD = AS $ 1000B AS (Real GDP) a. Calculate the size of the recessionary gap in the economy. b. What would happen to the recessionary gap if the government cut incometaxes by $50B? c. What would happen to the recessionary gap if the Fed increased discountrates? Explain your answer.11 pints eBook Print References Using the graph as a reference, suppose an economy's aggregate consumption function is C= $300 billion +0.50 YD. 1,000 Consumption ($ billions per year) 900 800 700 600 500 400 300 200 100 0 45° 20000 100 100 Disposable Income ($ billions per year) 50000 billion 700 billion 800 1,100 1,000 900 Instructions: Enter your responses as a whole number. a. At what level of income do households begin to save? $ b. By how much does consumption increase when disposable income rises $100 billion beyond the level of income from part a?EV Text Predictions: On The table below shows some of the expenditure amounts in the economy of Arkinia. The MPC, the MTR, and the MPM are all constant, as are the values of the three injections. a. Complete the table below. W 8 ZIN 200 SAN 400 500 GOO Aggregate expenditures ($billions) 700 HANS 800 600 HOD 200 T GO 1541 100 Accessibility: Investigate YD GB 200 460 620 C 400 130 195 Income (Sbillions) 325 The Economy of Arkinia 455 600 Search 5 800 -3 10 40 100 Tools MAL I se A SB 50 Se 58 50 30 50 Sa Draw a 45° line (labelled Y) and the aggregate expenditure function, labelled AE1. Identify expenditure equilibrium with the letter et. Use the tool "et" to show the expenditure equilibrium. Plot only the endpoints of Y and AE. Once all points have been plotted, click on the line (not individual points) and a tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed. G 180 AE₁ IMO 180 THIN 13 180 186 tac taid X 50 sa SAMSUNG 50 10 50 50 54 549 50 IM 40…
- Use the table below to answer the following questions. Real Consumptio GDP n $300 310 320 330 340 350 360 $290 298 306 314 322 330 338 (a) What is the size of the multiplier in this economy? Now, calculate the multiplier when the MPS is .5, .25, .10. What is the relationship between MPS and the multiplier? (b) If taxes were zero, government purchases were $10, investments $6, and net exports were zero, what is the equilibrium GDP? (c) If taxes are $5, government purchases are $10, investment is $6, and net exports are zero, what is the equilibrium GDP? (d) Assume that investment, net exports, and taxes are zero. Government purchases are $30, and the full-employment GDP without inflation is $330. How much must government spending be reduced to eliminate the inflationary expenditure gap?The table below provides Income and consumption Data in billions of dollars. Answer questions below based on it.Disposable Consumption SavingsIncome100 80 --------200 150 --------- What is the level of consumption when income is $300 billion? Group of answer choices $200 billion $240 billion $210 billion $60 billionClick on the icon to read the news clip, then complete the following steps. Business inventories fall when real GDP rises because 1800- 1600- Aggregate expenditure (billions of 2002 dollars) ○ A. inventories are falling from above target to their target levels 1400- B. firms put more production time into producing consumption goods and services OC. firms put more production time into producing exports 1200- OD. both B and C are correct 1000- The graph shows the aggregate planned expenditure curve. Draw a new AE curve to show the effect of an increase in exports and business investment. Label it AE₁. 8004 800 1000 1200 1400 45 degree line G AE 1600 1800 Draw a point at the new equilibrium expenditure. Draw an arrow along the new AE curve to show the effect of the increase in real GDP on consumption expenditure. Real GDP (billions of 2002 dollars) >>> Draw only the objects specified in the question. - News clip Business Inventories Decline, GDP Rises Real gross domestic product (GDP)…
- Answer the following questions based on the below graph AE 5000 2000 45 5000 TP Investment I: $400 Government G: $300 AE Taxes T: Net Export NX: $0 $100 a- Graphically determine the equilibrium level of output. b- Derive the consumption and saving functions. c- Mathematically solve for the equilibrium level of income. d- When the economy is at full employment the output level is $5500. How much would government purchases change to create full employment?4. a) Draw a TP-TE (or Keynesian cross) graph for South Africa. Suppose Real GDP is $425 billion while the Real GDP where TE=TP is $475 billions. total, Expenditure (billions) TE-TH HEL th I 1 45 425 Q2 475 Q1 TP - TE total Production (billions) b) If Real GDP is $425 billion, what will happen to inventories, to firm's production and to the Real GDP? Inventories will decrease and Production will increase GDP increases to $475 billion and realCThe following equations describe an economy C = 100 + 0.75 Y. I = 50 – 25i where C' is aggregate consumption , Y is disposable income, I is aggre gate investment, Tis taxes, G is go vernment purchases and i is the int erest rate. Derive the IS curve for th T= G= 50 e economy.
- 11:04 AM ECON 122 CAT ONE.docX Phoenix Files QUESTION ONE Is it desirable for a country to have a large gross domestic product? Explain (2 marks) QUESTION TWO You are given data on the following variables in an economy Government spending 300 Planned investment Net exports Autonomous taxes Income tax rate Marginal propensity to consume 0.5 a) Consumption (C) is 600 when income (Y) is equal to 1500. Solve for autonom ous consumption (2 ma rks) ii) 200 S 50 b) Solve for the equilibrium level of output in the following two scenarios: i) There is an income tax t=0.1, Edit 0.1 250 Q Search © | 46| 472 [ 66 c) In the economy with an income tax of 10%, what is the budget balance of the government? (2 marks) O X: × There is no income tax in the economy. Denote these two variables by Yw and YN respectively. (4 marks) d) Solve for the change in net exports that would bring the equilibrium output lev el in the economy with the income tax to the level of YN that you found in part b. specify both…The following questions refer to this table: a.At each level of output, calculate saving. At each level of out-put, calculate unplanned investment (inventory change).What is likely to happen to aggregate output if the economyproduces at each of the levels indicated? What is the equilib-rium level of output?b.Over each range of income (2,000 to 2,500, 2,500 to 3,000, andso on), calculate the marginal propensity to consume. Calculatethe marginal propensity to save. What is the multiplier?c.By assuming there is no change in the level of the MPC andthe MPS and planned investment jumps by 200 and is sus-tained at that higher level, recompute the table. What is thenew equilibrium level of Y? Is this consistent with what youcompute using the multiplier?What are the four categories of aggregate expenditure (demand)? Give an example of each. 9.1 Calculate the Marginal Propensity to Consume and the Marginal Propensity to Save. Fill in the blanks in the following table. Show that the MPC plus the MPS equals 1. National Income & Real GDP (Y) Consumption (C) Saving (S) MPC MPS $9,000 $8,000 $10,000 $8,600 $11,000 $9,200 $12,000 $9,800 $13,000 $10,400
