Analyzing macroeconomic events with the IS curve (II): Consider the followingchanges in the macroeconomy. Show how to think about them using the IScurve, and explain how and why GDP is afected in the short run.

Real GDP Cons umpti on ed ment Invest Purcha ment ses $9,0 $7,80 $1,50 0 00 0 $10, $8,60 $1,50 000 0 0 $11,0 $9,40 $1,50 00 0 0 $12, $10,2 $1,50 000 00 0 $13, $11,0 $1,50 000 00 0 $14, $11,8 $1,50 000 00 0 Net Export S $1,000 $700 $1,000 $700 $1,000 $700 $1,000 $700 $1,000 $700 $1,000 $700 (a) What is the equilibrium level of real GDP in this economy? (b) Compute the marginal propensity to consume. (c) Compute the government expenditures multipler. (d) Suppose net export ases by $400 (Assuming MPC, Gevernment Purchases, and Planned Investment are the same). What will be the new equilibrium level of GDP? Consumption?

Suppose you are given the following information: Qs = 100 + 3P Qd = 400 – 2P where Qsis the quantity supplied, Qdis the quantity demanded and P is price.   1. Years ago, Ricky paid $500 for CDs to put together a collection. Today, he sold hisCDs for $200. How does this sale affect current GDP?

U.S. macroeconomic data are among the best in the world. Given what you learned in the Clear It Up "How do statisticians measure GDP?", does this surprise you, or does this simply reflect the complexity of a modern economy? Suppose GDP was modified to include the value - positive or negative - of changes in environmental quality. How could this be done accurately?