Q: aggregate expenditure line is AE 1. A $10 million increase in planned investment causes aggregate…
A: Option (c).
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A: In economics, aggregate expenditure (AE) is a measure of public pay. Aggregate expenditure is…
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A: AD-AS model determines the equilibrium GDP and price level in the economy.
Q: inventory
A: Inventory refers to all the goods and even finished commodities that are held by a firm in stock for…
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Q: An economy is described by the following equations: = 2,000 + 0.5 (Y - T) = 900 IP G = 1,800 NX =…
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A: A closed economy indicates that the economy is not open for trade. The economy does not trade with…
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Q: How to calculate marginal propensity to consume
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Q: Explain the Equilibrium condition of Aggregate Expenditure= output Y. How are inventory changes…
A: AE = Y = C + I + G +X - M where, AE - Aggregate Expenditure Y - Output C - Consumption I -…
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Q: Which of the following will NOT cause a shift of the AS curve? Changes in non-labour O Changes in…
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Q: Use the Keynesian cross to predict the impact on equilibrium GDP of the following. In each case,…
A: a. An increase in government purchases : Direction of the change : Demand curve will shift to the…
Q: Differentiate between an induced increase in consumption and in autonomous increase in consumption…
A: Autonomous consumption is the level of consumption without income. On the other hand, Induced…
Q: What is the difference (if any) between macroeconomic equilibrium and expenditure equilibrium ?
A: Equilibrium is the situation where demand and supply curve of goods intersect.
Q: Match the following terms with their notations. Marginal Propensity to Consumer Choose.. Marginal…
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Q: Q.1.7 In the Keynesian macroeconomic model, the equation for the savings function is given as: S =…
A: The saving function, often known as the inclination to save, describes the link between saving and…
Q: Carefully explain the major differences between the Keynes’ and Fisher’s models of consumption.
A: The consumption function, often known as the Keynesian consumption function, is an economic formula…
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Q: examples for the determinants of the consumption element of Aggregate Demand. (Examples are crucial…
A: Consumption is one of the elements of the aggregate demand of a country. It further includes various…
Q: Why can’t an economy with a MPC greater than one reach a stable equilibrium in the aggregate…
A:
Q: Calculate the propensity to consume.
A: The propensity to consume means change in consumption with respect to change in income. In other…
Q: What is the difference between aggregate expenditure and aggregate demand? Why is the aggregate…
A: Aggregate expenditure may increase with increase in proce. Aggregate demand may be having inverse…
Q: The Aggregate Expenditure or Keynesian macroeconomics model is based upon the theory that the level…
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Q: Which of the following would shift the aggregatedemand curve to the left?a. A decline in the stock…
A: Aggregate demand(AD) depicts the total expenditure on domestic services and goods at each price…
Q: An economy is described by the following equations: C= 1500 + 0.75(Y - T) po = 800 G= 1500 X = 100…
A:
Q: Consider the Aggregate Expenditure Model. When the real interest rate falls, the AE Line will shift…
A: Equilibrium occurs when aggregate expenditure curve intersects 45 degree line. It is comprised of…
Q: Which of the following statements is TRUE regarding the Aggregate Expenditure model?
A: Answer 33. Aggregate Expenditure Model is referred to as a model which relates to the components of…
Q: Suppose Mexico, one of our largest trading partners and purchaser of a large quantity of our…
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Q: Two variables that affect the slope of the aggregate demand curve are Select one: a. tax rates and…
A: Aggregate Demand curve is the curve that represents the combinations of all components of GDP that…
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- please answer as detailed as you can Q. What is the difference (if any) between macroeconomic equilibrium and expenditure equilibrium ?economics Consider a goods market equilibrium (The aggregate expenditure model) in a closed economy a) Equationally and graphically (using the graph above) show (define) a goods market equilibrium b) Explain which factor changes the slope of the ZZ(or D, demand) curve and which factors shift the ZZ curve c) Suppose that marginal propensity to consume is equal to 0.8. Explain how much an increase in government spending 500 million of dollars raises real output and why output increases more than government spending?what is The Aggregate Expenditure Model
- Explain, in detail, how the adjustment to macroeconomic equilibrium occurs when spending is less than production. Be sure to discuss how inventories play a crucial role in the adjustment process. State what happens to GDP and employment during the adjustment process.An economy is described by the following equations: C= 1500 + 0.75(Y - T) po = 800 G= 1500 X = 100 M=0 T=1500 †=0 Y* = 12000 a) Find a numerical equation linking planned aggregate expenditure to output. b) Find its exogenous expenditure and induced expenditure in this economyThe following graph shows a decrease in aggregate demand (AD) in a hypothetical country. Specifically, aggregate demand shifts to the left from AD1AD1 to AD2AD2, causing the quantity of output demanded to fall at all price levels. For example, at a price level of 140, output is now $200 billion, where previously it was $300 billion. The following table lists several determinants of aggregate demand. Complete the table by indicating the change in each determinant necessary to decrease aggregate demand. Change needed to decrease AD Wealth (increase/ decrease) Taxes (increase/ decrease) Expected rate of return on investment (increase/ decrease) Incomes in other countries (increase/ decrease)
- What are the determinants of aggregate demand? How do these determinants differ from the determinants of aggregate expenditure? What is the significance, if any, of these differences?Suppose that the price level is constant and that investment decreases sharply. How would you show this decrease in the aggregate expenditures model? What would be the outcome for real GDP? How would you show this fall in investment in the aggregate demand–aggregate supply model, assuming the economy is operating in what, in effect, is a horizontal section of the aggregate supply curve?Name two macroeconomic variables that decline when the economy goes into a recession. Name one macroeconomic variable that rises during a recession.
- Suppose the Australian government increases the level of government spending. Explain how an increase in government spending impacts upon the position of the AD and AS curves. Use a relevant diagram and explain your answer in detail.Why do the aggregate expenditure function and the aggregate demand curve both shift upward at the same time?Consider the table on the right, which shows business investment in inventories for each quarter from the first quarter of 2007 to the first quarter of 2012, measured in millions of 2007 dollars. Provide a macroeconomic explanation for this pattern. (Hint: When did the recession during this period begin and end?) The negative growth of inventories indicates a period of OA. inflation since inventories needed to be reduced in the face of increasing storage cost OB. recession because demand was met by drawing down past inventories and production did not increase. OC. recovery since inventories needed to be used to meet demand. OD. recession because inventories increased due to lack of demand Year 2007 2008 2009 2010 2011 2012 2013 Quarter Q1 308889 Q2 Q3 Q4 R288828 Q1 Q2 Q3 Q4 Q1 228892889 Q2 Q3 Q4 Q1 Q2 Inventory Investment (millions of 2007 dollars) $3360 - 2822 15,570 19,644 6061 9512 11,856 4699 -2364 7779 -4807 - 4807 2663 2508 4841 -6805 8965 12,153 6462 2179 2061 7298 14,091 3875…