2. From what was learned in class, explain what the values of the slope and vertical intercept of the aggregate consumption function mean from an economic perspective. Income-expenditure equilibrium Using the data in the following table to complete the following questions. GDP YD Planned (billions of dollars) $0 $0 $200 $100 400 400 500 100 800 800 800 100 1,200 1,200 1,100 100 1,600 1,600 1,400 100 2,000 2,000 1,700 100 2,500 2,500 2,000 100 3,000 3.000 2,300 100 1. Complete the columns for AEPlanned and unplanned in the table. 2. What is the value of the MPC? 3. What is the aggregate consumption function? AE Planned Unplanned 4. What is the equation for the planned aggregate expenditure function? 4. 5. What is the value of income-expenditure equilibrium GDP, (Y*)? 6. Explain in economic terms what happens when not in the income-expenditure equilibrium? Both when GDP > AE planned and GDP < AE planned. For each situation what needs to happen to move the economy toward equilibrium?.

ECON MACRO
5th Edition
ISBN:9781337000529
Author:William A. McEachern
Publisher:William A. McEachern
Chapter9: Aggregate Demand
Section: Chapter Questions
Problem 1.1P
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2. From what was learned in class, explain what the values of the slope and vertical intercept of
the aggregate consumption function mean from an economic perspective.
Income-expenditure equilibrium
Using the data in the following table to complete the following questions.
GDP
YD
Planned
(billions of dollars)
$0
$0
$200
$100
400
400
500
100
800
800
800
100
1,200
1,200
1,100
100
1,600
1,600
1,400
100
2,000
2,000
1,700
100
2,500
2,500
2,000
100
3,000
3.000
2,300
100
1. Complete the columns for AEPlanned and unplanned in the table.
2. What is the value of the MPC?
3. What is the aggregate consumption function?
AE
Planned
Unplanned
4. What is the equation for the planned aggregate expenditure function?
4.
5. What is the value of income-expenditure equilibrium GDP, (Y*)?
6. Explain in economic terms what happens when not in the income-expenditure
equilibrium? Both when GDP > AE planned and GDP < AE planned. For each situation what
needs to happen to move the economy toward equilibrium?.
Transcribed Image Text:2. From what was learned in class, explain what the values of the slope and vertical intercept of the aggregate consumption function mean from an economic perspective. Income-expenditure equilibrium Using the data in the following table to complete the following questions. GDP YD Planned (billions of dollars) $0 $0 $200 $100 400 400 500 100 800 800 800 100 1,200 1,200 1,100 100 1,600 1,600 1,400 100 2,000 2,000 1,700 100 2,500 2,500 2,000 100 3,000 3.000 2,300 100 1. Complete the columns for AEPlanned and unplanned in the table. 2. What is the value of the MPC? 3. What is the aggregate consumption function? AE Planned Unplanned 4. What is the equation for the planned aggregate expenditure function? 4. 5. What is the value of income-expenditure equilibrium GDP, (Y*)? 6. Explain in economic terms what happens when not in the income-expenditure equilibrium? Both when GDP > AE planned and GDP < AE planned. For each situation what needs to happen to move the economy toward equilibrium?.
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