-. Consider a closed economy with the following information given. We know that the total pro- expenditure is also duction of this economy is exactly 2000 units (Y= 2000). Government known and is 320 units (G= 320). The consumption expenditure function is:

A9

Find equilibrium level of national income from the following:- Autonomous consumption = $200  MPC = 0.8 Investment = $100 All the values are in million dollars

5:06 A & & & P M Page 4 of 5 QUESTION 4 The figure below shows the planned Aggregate Expenditure function for a hypothetical economy (AEp = 1,000 + 0.5 * Y). In this economy, taxes and transfers are equal to zero, so YD =Y. What is the value of unplanned investment expenditure (Iµ) when GDP = 3,000? Suppose that, next period, autonomous consumption increased by 100 and every thing else remained the same. Under these new circumstances, what would the value of unplanned investment be when GDP = 3,000? 5,000 4, 500 4, 000 3, 500 3,000 AEp = 1,000 + 0.5*Y 2, 500 2000 1, 500 1,a00 500 500 1,000 1, 500 2,000 2 500 3,000 3,500 4,000 4,500 5,000 REAL GDP Page 5 of 5 QUESTION A5 a. Suppose that some kind of significant economic event has occurred, and you learn that the event will de finitely cause the aggregate price level to decrease, but that its effect on short-run equilibrium real GDP cannot be determined without knowing the exact PLANNED AGGREGATE EXPENDITURE

Given, autonomous consumption Co = a = 4.0, marginal propensity to consume MPC = 0.80, investment | = 8.5, government expenditure G = 9.0, exports X = 1.5, imports M = 0.75, and taxes T = 0 ($, billion): i. What is the level of consumption and saving if income is 10.0? ii. What is the equilibrium output level YE (assume this is real GDP) for the economy?

Aggregate Expenditures and Multipliers Assignment a. Using the aggregate expenditure function above, what is the current level of real GDP? b. Using the aggregate expenditure function above, what would be the level of real GDP if the aggregate expenditure function shifted up by $0.2T? c. If Investment expenditures increase by $300B and MPC is equal to 0.90, what will be the increase in real GDP? d. If Government expenditures increase by $800B and MPS is equal to 0.05, what will be the increase in real GDP?

Calculate the value of consumption expenditure from the following:- National income = $6000 Autonomous consumption = $1000 Marginal propensity to consume = 0.80

hi there is another picture as well

Homework: Demand-Side Equilibrium: Unemployment or Inflation? The following graph shows the total expenditure line (TE) for an economy where current equilibrium output is $400 billion and potential output is $650 billion. REAL EXPENDITURE (Billions of dollars) § 2 600 500 400 300 200 100 0 0 100 45-degree ling 200 300 400 500 600 REAL GDP (Bilions of dollars) The economy is experiencing TE Potential GDP 700 800 TE equal to $ by billion. Thus, the value of the multiplier for this economy is billion. To close the output gap, government purchases could On the previous graph, shift the TE line to show the change in total expenditure necessary to close the output gap. Note: Select and drag the curve to the desired position. The curve will snap into position, so if you try to move a curve and it snaps back to its original position, just drag it a little farther.

Suppose that autonomous consumption is 2,190, government purchases are 590, taxes are 0, planned investment spending is 648, net exports are -132, and the MPC is 0.71. What is the value of autonomous spending? Round your answer to the closest 2 decimal places if needed. Do not enter dollar signs ($) in your answer.