Consider an economy described by the following equations: Y = C+I+G C = 100+0.75 (Y-T) I = 500-50r G = 125 T = 100   where Y is GDP, C is consumption, I is investment, G is government purchases, T is taxes, and r is the interest rate. If the economy were at full employment (that is, at its natural rate), GDP would be 2,000. Explain the meaning of each of these equations. What is the marginal propensity to consume in this economy? Suppose the central bank’s policy is to adjust the money supply to maintain the interest rate at 4 percent, so r = 4. Solve for GDP. How does it compare to the full-employment level? Assuming no change in monetary policy, what change in government purchases would restore full employment? Assuming no change in fiscal policy, what change in the interest rate would restore full employment?

The following are the components of aggregate demand EXCEPT,   A) government spending. B) consumption of households. C) investment by firms. D) household saving.

Briefly explain whether the production of each of the following goods is likely to fluctuate more or less than real GDP does during the business cycle:  Tesla Model 300  McDonald’s Big Macs  Whirlpool Refrigerator  Pampers Diapers  PLEASE PLEASE explain your answers for each of the products listed above.  ALSO PLEASE reference your data sources and any academic articles that support your answers.

The following graph shows total production (TP) and the level of Natural Real GDP (NRGDP) for a hypothetical economy. When Real GDP is $325 billion, consumption is $275 billion, government purchases are $50 billion, and investment is $25 billion. When Real GDP is $375 billion, consumption is $300 billion, government purchases are $50 billion, and investment is $25 billion. Use the blue line (circle symbol) to plot the economy's total expenditure function within a simplified Keynesian framework. TO TAL EXPENDITURE (Billions of dollars) 500 475 450 425 400 375 350 325 300 TP NRGDP 300 325 350 375 400 425 450 475 500 REAL GDP (Billions of dollars) TE The economy is in equilibrium when Real GDP is At this point, the economy is also in Which of the following did Keynes argue would be needed to move the economy to equilibrium at Natural Real GDP? Check all that apply. ✓ A decrease in consumption ✓ An increase in government purchases A decrease in government purchases ✓ An increase in…