Note: Line segments will automatically connect the points.PRICE LEVEL (Billions of dollars)200160120080160240REAL GDP (Index numbers)The equilibrium price level is320400Initial ADThe change in government spendingthe multiplier effect.SRASNew AD✓, and the equilibrium level of real output isSuppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5.On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand(New AD) curve.the equilibrium level of real output by. The price level increase 2. EquilibriumThe following table shows the real output demanded and supplied at various price levels in a hypothetical economy.Real Output Demanded(Billions of dollars)4080120200320Price Level(Index number)160120804020Real Output Supplied (Billions of dollars)(Billions of dollars)34032028020080On the following graph, use the blue points (circle symbols) to plot the aggregate demand (Initial AD) curve for the economy. Then use the orange points(square symbols) to plot the short-run aggregate supply (SRAS) curve for the economy.Note: Line segments will automatically connect the points.

The equilibrium level in macro economy is achieved at the level where AD=SRAS=LRAS. This is called…

Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 40 0 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 The change in government spending the multiplier effect. Initial AD -O SRAS New AD and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. ▼ the equilibrium level of real output by . The price level increase

Note: Line segments will automatically connect the points. PRICE LEVEL (Billions of dollars) 200 160 120 40 0 0 80 160 240 REAL GDP (Index numbers) The equilibrium price level is 320 400 The change in government spending the multiplier effect. Initial AD -O SRAS New AD and the equilibrium level of real output is Suppose that the government spending increases by $16 billion and the expenditure multiplier in this economy is 5. On the previous graph, use the purple points (diamond symbols) to illustrate the effect of the increase in government spending on the aggregate demand (New AD) curve. ▼ the equilibrium level of real output by . The price level increase

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Aa30 Economics
Aggregate expenditure (billions of 2007 dollars) 375 347 150 100 10 0 100 200 45° line AE C 300 375 Real GDP (billions of 2007 dollars) 6. Using the graph above, assume there are no taxes in this economy. Answer the following questions: a. MPC = b. MPM = C. MP to Spend = =Z= d. AE Function = e. Multiplier = f. Equilibrium level of Real GDP is
If consumption is C=100+0.75Yd Taxes is T=50+0.5Y Export is X=200 Import is M=50+0.25Y Government spending is G=150 Investment is I=200 .Use the multiplier applicable to export,to explain how a100–billion decline in demand for export could affect the economy’s: (i) GDP/income Expert Answer Step 1 A multiplier is an important factor of an economy that can lead to change in many economic variables when increase or decrease. Step 2 An export multiplier is a multiplier that is applicable to export. The effect of a decline in demand by 100 billion on GDP/income will be computed by the export multiplier. Thus, The export multiplier shows that the GDP/income will be decreased by 1.33 billion with the decline in the 100-billion decline in the demand. please show how you get M=0.5
Government expenditures represents one of the injections of expenditure. Explain how an increase in government spending may have a multiplier effect in the economy.
Question 2 Refer to the information provided in Figure 23.9 below to answer the question(s) that follow. Aggregate expenditures ($ millions) 225 200 175 150 45° AE 100 200 300 Aggregate output ($ millions) Figure 23.9 a) Refer to Figure 23.9. Write the equation for the aggregate expenditure function (AE). Show your work. b) Refer to Figure 23.9. What is the equilibrium level of output in this economy? State the equilibrium condition used to determine this. c) Explain the forces that maintain/drive the economy to this equilibrium by considering what will happen at the following two levels of output, $300 million and $100 million. You will need to discuss changes in investment through unplanned inventories and the response of output. d) Refer to Figure 23.9. How will equilibrium aggregate expenditure and equilibrium aggregate output change as a result of a decrease in investment by $20 million? e)The interest rate is an exogenous factor that effects the level of investment in an economy.…
Refer to the table on the next page in answering the questions that follow:a. If full employment in this economy is 130 million, will there be an inflationary expenditure gap or a recessionary expenditure gap? What will be the consequence of this gap? By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the inflationary expenditure gap or the recessionary expenditure gap? Explain. What is the multiplier in this example?b. Will there be an inflationary expenditure gap or a recessionary expenditure gap if the full-employment level of output is $500 billion? Explain the consequences. By how much would aggregate expenditures in column 3 have to change at each level of GDP to eliminate the gap? What is the multiplier in this example? c. Assuming that investment, net exports, and government expenditures do not change with changes in real GDP, what are the sizes of the MPC, the MPS, and the multiplier?
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Suppose an economy had aggregate demand components with the following relationships: Consumption spending, C=140+.60*(DY) Investment spending,I=25+.15*Y Government Spending, G= 0 Net Export Spending,X=0 Tax collections, Tx=0 a. What is the equilibrium income for this economy? b. If the government decided to increase G spending by 6, what would be the new equilibrium income for this economy? c. If instead the government decided to reduce Tx (taxes) by 10, what would be the new equilibrium income for the economy? d. If instead the government decided to increase G spending and Increase Tx (taxes) by 20, what would be the new equilibrium for this economy?
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c. Given the original $20 billion level of exports, what would be net exports and the equilibrium GDP if imports were $10 billion greater at each level of GDP? Fill in the gray-shaded cells. Instructions: Enter your answers as a whole number. If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. (1) (2) (3) (4) (5) (6) Aggregate Expenditures, Private Closed Aggregate Expenditures, Open Economy, Billions Real Domestic Output (GDP = DI), Billions Exports, Billions Imports, Billions Net Exports, Billions Economy, Billions $350 $390 $20 $40 400 430 20 40 450 470 20 40 500 510 20 40 550 550 20 40 600 590 20 40 650 630 20 40 700 670 20 40 Net exports = $ billion Equilibrium GDP = $ billion d. What is the multiplier in this example?
The full employment level of GDP is 470 the current level of GDP output is 430. Income is 430 and consumption is 420 income increases to 450 and consumption increases to 435. What will the MPC be What will the MPS be What will the multiplier be How much and in what direction will spending need to change to regain the full employment level of GDP How much and in what direction will taxes need to change to regain the full employment level of GDP You must show all work you must take all steps and it must be done in a neat well organized easy to follow manner.
Can someone please explain this to me?