When the price level falls     A)  the slope of the aggregate expenditures curve changes.   B)  the aggregate expenditure curve remains constant.   C)  the aggregate expenditures curve shifts down.   D)  the aggregate expenditures curve shifts up

37. If the equilibrium level of GDP is $30,000, using the equations for C, I, G, and NX shown above, find the value of the marginal propensity to consume. C=4,000+ 0.5Y I= 1,500 G=2,250 NX=-150

4. The investment demand curve The following table shows the expected rate of profit and the cumulative amount of investment with that rate of profit or higher in a hypothetical economy. For example, $100 billion worth of investment projects have an expected rate of profit that is greater than or equal to 8%. Put another way, at an interest rate of 8%, the amount of investment demanded equals $100 billion. Expected Rate of Profit Cumulative Investment at this Rate of Profit or Higher (Percent) (Billions of Dollars) 75 INTEREST RATE (Percent) 16 15 14 13 12 + 11 10 2 0 Using the blue points (circle symbol), plot the hypothetical economy's investment demand curve (1) on the graph. Line segments will automatically connect the points. H+++ 10 0 8 6 4 100 25 125 150 50 75 100 126 150 175 200 REAL INVESTMENT (Billions of dollars) Investment Function Determine how each of the following events will shift the investment demand (1) curve. ?

If the supply of petroleum were reduced by petroleum firms due to rising inventories, we can expect what?

Nigeria is currently experiencing a recessionary gap of approximately 24.6 billion in their currency.  Its MPC is approximately 0.8.  How much would the government have to change taxes to close the gap?  Assume a horizontal SRAS.  If the government should decrease taxes, enter a negative answer.  one decimal place

Which of the following would increase aggregate demand?   A) Increase in taxation.   B) Increase in savings.   C) Decrease in consumption spending.   D) Increase in government spending.

The graph gives an economy's AE curve when the economy is in long-run equilibrium. Equilibrium expenditure is $12 trillion. Draw a new AE curve that shows the effect of an increase in investment. Label it AE₁. Draw a point at the new equilibrium expenditure. Label it B. Draw another AE curve that shows equilibrium expenditure in the short run. Label it AE2. Draw a point at the short-run equilibrium. Label it C. Finally, draw the AE curve when the economy returns to long-run equilibrium. Label it AE3. 16- 14- 12- 10- Aggregate expenditure (trillions of 2012 dollars) 10 A 45 degree line AEO 15 11 12 13 14 Real GDP (trillions of 2012 dollars) >>> Draw only the objects specified in the question. 16

A recessionary gap: Would cause a depletion of inventories. Would occur if total output were less that aggregate demand. Is the amount by which aggregate expenditure falls short of full employment GDP. Is the amount by which total spending exceeds GDP.

Explain the effects of the following actions on equilibrium income, assuming that the marginal propensity to consume is 0.8 A. Government purchases rise by $40 billion B. Taxes fall by $40 billion.

If the output level is such that the Y=AE line (45-degree line) is below the aggregate expenditure line, which of the following is true?   a Aggregate expenditure is greater than output, so inventories will decrease and output will increase. b Aggregate expenditure is less than output, so inventories will increase and output will decrease. c Aggregate expenditure is less than output, so inventories will decrease and output will increase. d Aggregate expenditure is greater than output, so inventories will increase and output will decrease.