Real GDP (output) equals Possible Unplann- levels of disposable Consump- ed inven- tory lions of (billions of (billions employment income (bil- (millions of tion workers) dollars) dollars) of dollars) 40 $325 $300 45 375 325 50 425 350 55 475 375 60 525 400 65 575 425 70 625 450 |||

Real GDP (output) equals Possible Unplann- levels of disposable Consump- ed inven- tory lions of (billions of (billions employment income (bil- (millions of tion workers) dollars) dollars) of dollars) 40 $325 $300 45 375 325 50 425 350 55 475 375 60 525 400 65 575 425 70 625 450 |||

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter19: The Macroeconomic Perspective

Section: Chapter Questions

Problem 5SCQ: According to Table 19.7, how often have recessions occurred since the end of World War II (1945)?

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Question

Assume the level of autonomous investment is $100 billion and aggregate expenditures
equal consumption and investment. Based on the following table, answer the following
questions. a. Fill in the unplanned inventory column.
b. Determine the MPC and MPS.
c. If this economy employs a labor force of 40 million, what will happen to this level of employment? Explain and identify the equilibrium level of output.

Real GDP
(output)
equals
Possible
Unplann-
levels of disposable Consump- ed inven-
tory
lions of (billions of (billions
employment income (bil-
(millions of
tion
workers)
dollars)
dollars) of dollars)
40
$325
$300
45
375
325
50
425
350
55
475
375
60
525
400
65
575
425
70
625
450
|||

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