ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Transcribed Image Text:### Table of Economic Data
| Real GDP | Consumption | Planned Investment | Government Purchases | Net Exports |
|----------|-------------|--------------------|----------------------|-------------|
| $9,000 | $7,800 | $1,500 | $1,000 | -$700 |
| $10,000 | $8,600 | $1,500 | $1,000 | -$700 |
| $11,000 | $9,400 | $1,500 | $1,000 | -$700 |
| $12,000 | $10,200 | $1,500 | $1,000 | -$700 |
| $13,000 | $11,000 | $1,500 | $1,000 | -$700 |
| $14,000 | $11,800 | $1,500 | $1,000 | -$700 |
#### Questions:
(a) What is the equilibrium level of real GDP in this economy?
(b) Compute the marginal propensity to consume (MPC).
(c) Compute the government expenditures multiplier.
(d) Suppose net exports increase by $400 (assuming MPC, Government Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?
### Instructions for Response:
- Utilize the formula \( \Delta Y = \text{Multiplier} \times \Delta \text{Spending} \) to solve for changes in GDP.
- Use \( MPC = \Delta \text{Consumption} / \Delta \text{GDP} \) for computation of MPC, where applicable.
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- If the increase in government spending is $500 and the marginal propensity to consume is .75 then the change in real gross domestic domestic product will be ___arrow_forwardCalculating the MPSAnd MPC. In one year a consumer income increase by $200 and her consumption increase by $140 ? Her marginal propensity to consume is equal to __. Her marginal prosperity to save is equal to __. (Thanks)arrow_forward
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