Macroeconomics (7th Edition)
7th Edition
ISBN: 9780134738314
Author: R. Glenn Hubbard, Anthony Patrick O'Brien
Publisher: PEARSON
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Question
Chapter 12, Problem 12.4.6PA
To determine
Changes in the autonomous expenditure.
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5:06
A & & & P M
Page 4 of 5
QUESTION 4
The figure below shows the planned Aggregate Expenditure function for a hypothetical economy
(AEp = 1,000 + 0.5 * Y). In this economy, taxes and transfers are equal to zero, so YD =Y. What
is the value of unplanned investment expenditure (Iµ) when GDP = 3,000? Suppose that, next
period, autonomous consumption increased by 100 and every thing else remained the same.
Under these new circumstances, what would the value of unplanned investment be when GDP =
3,000?
5,000
4, 500
4, 000
3, 500
3,000
AEp = 1,000 + 0.5*Y
2, 500
2000
1, 500
1,a00
500
500
1,000
1, 500
2,000
2 500
3,000
3,500
4,000
4,500
5,000
REAL GDP
Page 5 of 5
QUESTION A5
a. Suppose that some kind of significant economic event has occurred, and you learn that
the event will de finitely cause the aggregate price level to decrease, but that its effect on
short-run equilibrium real GDP cannot be determined without knowing the exact
PLANNED AGGREGATE EXPENDITURE
Question 45
5 pts
Potential GDP equals $500 billion. The economy is currently producing GDP equal to $400
billion. If the MPC is 0.52, then autonomous spending must change by $ billion for the
economy to move to potential GDP? Please round to two decimal places where needed.
Question 46
5 pts
Suppose Ford plans to produce 9.2 million trucks this year. The company expects to sell 7.5
million. Suppose that at the end of the year, Ford has sold 7.3 million trucks. What is the level of
planned inventories? Please round to the nearest one-decimal and enter as millions. For
example, if your answer was 4,500,000 you would enter the number 4.5.
Question 47
5 pts
An economy sees consumption increase by $2,792 million when disposable income increases by
$4,770. Assuming the marginal propensity to consume remains constant, what is the marginal
propensity to save? Please round to the closest two decimal places.
Deriving and exploring the total expenditures curve The
following graph shows total production (TP) and the
level of Natural Real GDP (NRGDP) for a hypothetical
economy. When Real GDP is $350 billion, consumption
is $300 billion, government purchases are $25 billion,
and investment is $50 billion. When Real GDP is $400
billion, consumption is $325 billion, government
purchases are $25 billion, and investment is $50 billion.
Use the blue line (circle symbol) to plot the economy's
total expenditure function within a simplified Keynesian
framework. (?) The economy is in equilibrium when
Real GDP is? [$425 billion, $400 billion, $350 billion, or
$375 billion] At this point, the economy is also in? [Says
Paradox, a recessionary gap, or an inflationary gap]
which of the following did Keynes argue would be
needed to move the economy to the equilibrium at
Natural Real GPD? Check all that apply. - An increase
in investment A decrease in government purchases -
A decrease in consumption - An…
Chapter 12 Solutions
Macroeconomics (7th Edition)
Ch. 12.A - Prob. 1RQCh. 12.A - Prob. 2RQCh. 12.A - Prob. 3RQCh. 12.A - Prob. 4RQCh. 12 - Prob. 12.1.1RQCh. 12 - Prob. 12.1.2RQCh. 12 - Prob. 12.1.3RQCh. 12 - Prob. 12.1.4PACh. 12 - Prob. 12.1.5PACh. 12 - Prob. 12.1.6PA
Ch. 12 - Prob. 12.1.7PACh. 12 - Prob. 12.1.8PACh. 12 - Prob. 12.1.9PACh. 12 - Prob. 12.2.1RQCh. 12 - Prob. 12.2.2RQCh. 12 - Prob. 12.2.3RQCh. 12 - Prob. 12.2.4RQCh. 12 - Prob. 12.2.5RQCh. 12 - Prob. 12.2.6PACh. 12 - Prob. 12.2.7PACh. 12 - Prob. 12.2.8PACh. 12 - Prob. 12.2.9PACh. 12 - Prob. 12.2.10PACh. 12 - Prob. 12.2.11PACh. 12 - Prob. 12.2.12PACh. 12 - Prob. 12.2.13PACh. 12 - Prob. 12.2.14PACh. 12 - Prob. 12.2.15PACh. 12 - Prob. 12.3.1RQCh. 12 - Prob. 12.3.2RQCh. 12 - Prob. 12.3.3RQCh. 12 - Prob. 12.3.4RQCh. 12 - Prob. 12.3.5RQCh. 12 - Prob. 12.3.6PACh. 12 - Prob. 12.3.7PACh. 12 - Prob. 12.3.8PACh. 12 - Prob. 12.3.9PACh. 12 - Prob. 12.3.10PACh. 12 - Prob. 12.3.12PACh. 12 - Prob. 12.4.1RQCh. 12 - Prob. 12.4.2RQCh. 12 - Prob. 12.4.3RQCh. 12 - Prob. 12.4.4PACh. 12 - Prob. 12.4.5PACh. 12 - Prob. 12.4.6PACh. 12 - Prob. 12.4.7PACh. 12 - Prob. 12.4.8PACh. 12 - Prob. 12.4.9PACh. 12 - Prob. 12.4.10PACh. 12 - Prob. 12.4.11PACh. 12 - Prob. 12.4.12PACh. 12 - Prob. 12.4.13PACh. 12 - Prob. 12.4.14PACh. 12 - Prob. 12.5.1RQCh. 12 - Prob. 12.5.2RQCh. 12 - Prob. 12.5.3RQCh. 12 - Prob. 12.5.4PACh. 12 - Prob. 12.5.5PACh. 12 - Prob. 12.5.6PACh. 12 - Prob. 12.1RDECh. 12 - Prob. 12.2CTECh. 12 - Prob. 12.3CTE
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- The following are exogenous (not directly affected by income): G = 9 I = 14 X = M = 0 The consumption function is: C = k + cY, where k = 8, c = 0.6 What is the equilibrium level of GDP? State to ONE decimal place What is the multiplier for this economy? The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 What is the equilibrium level of GDP? What is the multiplier? Same information as in the previous question: The following are exogenous (not directly affected by income): G = 11 I = 4 X = M = 0 The consumption function is: C = k + cY, where k = 3, c = 0.8 Imagine the maximum potential output or real GDP of this economy is 100. Assume that is the same as saying we reach the edge of the PPF at 100. Now assume we want to get that economy from the current level of GDP to its maximum potential of 100. We can do this in two ways - either increase government spending (G) or reduce taxes, (we…arrow_forwardAnswer the question on the basis of the following table for a particular country in which C is consumption expenditures, Ig is gross investment expenditures, G is government expenditures, X is exports, and M is imports. All figures are in billions of dollars. Each question is independent of other question using the same table, unless otherwise stated. Price Level C Ig G X M Real GDP 128 $18 $2 $3 $1 $5 125 $20 $4 $3 $2 $4 122 $22 $6 $3 $3 $3 119 $24 $8 $3 $4 $2 116 $26 $10 $3 $5 $1 Refer to the table. The real-balances effect of changes in the price level is: Group of answer choices shown by columns (1) and (5) of the table. shown by columns (1) and (4) of the table. not shown by the data in the table. shown by columns (1) and (2) of the table.arrow_forwardAnswer the following questions, which relate to the aggregate expenditures model:a. If Ca is $100, Ig is $50, Xn is -$10, and G is $30, what is the economy’s equilibrium GDP?b. If real GDP in an economy is currently $200, Ca is $100, Ig is $50, Xn is -$10, and G is $30, will the economy’s real GDP rise, fall, or stay the same?c. Suppose that full-employment (and full-capacity) output in an economy is $200. If Ca is $150, Ig is $50, Xn is -$10, and G is $30, what will be the macroeconomic result?arrow_forward
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