Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
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Question
Chapter 28, Problem 25APA
To determine
Illustrate the effects of an increase in export on equilibrium expenditure in the short run on a graph.
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Students have asked these similar questions
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-
10
Aggregate expenditure (trillions of 2009 dollars)
A
45 degree line
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12
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14
Real GDP (trillions of 2009 dollars)
Click the graph, choose a tool in the palette and follow the instructions to create your graph.
15
AE
16
17
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
Suppose an economy is operating at point A on the graph showing aggregate demand. A decrease in the aggregate price level
causes the economy to move to point B
On the graph showing aggregate expenditures (AE), show the change caused by the movement from point A to point B on the
aggregate demand curve.
Aggregate price level
Aggregate demand
Aggregate output
Aggregate expenditures
Income (Y)
Y-AE
AE
Chapter 28 Solutions
Macroeconomics
Ch. 28.1 - Prob. 1RQCh. 28.1 - Prob. 2RQCh. 28.1 - Prob. 3RQCh. 28.2 - Prob. 1RQCh. 28.2 - Prob. 2RQCh. 28.2 - Prob. 3RQCh. 28.2 - Prob. 4RQCh. 28.3 - Prob. 1RQCh. 28.3 - Prob. 2RQCh. 28.3 - Prob. 3RQ
Ch. 28.4 - Prob. 1RQCh. 28.4 - Prob. 2RQCh. 28.4 - Prob. 3RQCh. 28.4 - Prob. 4RQCh. 28 - Prob. 1SPACh. 28 - Prob. 2SPACh. 28 - Prob. 3SPACh. 28 - Prob. 4SPACh. 28 - Prob. 5SPACh. 28 - Prob. 6SPACh. 28 - Prob. 7SPACh. 28 - Prob. 8SPACh. 28 - Prob. 9SPACh. 28 - Prob. 10SPACh. 28 - Prob. 11SPACh. 28 - Prob. 12SPACh. 28 - Prob. 13SPACh. 28 - Prob. 14SPACh. 28 - Prob. 15APACh. 28 - Prob. 16APACh. 28 - Prob. 17APACh. 28 - Prob. 18APACh. 28 - Prob. 19APACh. 28 - Prob. 20APACh. 28 - Prob. 21APACh. 28 - Prob. 22APACh. 28 - Prob. 23APACh. 28 - Prob. 24APACh. 28 - Prob. 25APACh. 28 - Prob. 26APACh. 28 - Prob. 27APACh. 28 - Prob. 28APACh. 28 - Prob. 29APACh. 28 - Prob. 30APACh. 28 - Prob. 31APACh. 28 - Prob. 32APACh. 28 - Prob. 33APACh. 28 - Prob. 34APA
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Similar questions
- equilibrium is important in the simple expenditure model so we need to know the following: what is the signal or indicator in the economy that will tell us we are not in equilibrium? What value for that signal will assure us we are in equilibrium? Explain why. ( Please solve whole question ASAP . I will definitely Rate your answer )arrow_forwardWhat is income-expenditure equilibrium? Derive aggregate demand curve from income expenditure equilibrium when the price level is not changed.arrow_forwardGiven the information below, answer the questions that follow. C = $40 + 0.8Y I = $30 G = $40 X – M = -$10 a) What is the equilibrium GDP? Explain why $550 is not the equilibrium. b) What is the marginal propensity to consume (MPC) in this question? (Explain) c) What is the multiplier in this question and explain the significance of the multiplier? (Show all work) d) Assuming that the full employment level of output is $600, what kind of gap exists and how large is it? Explain e) If transfer payments increased by $10 and the price level did not change, what would the new equilibrium be? (Show all work) f) How would your answer to part (e) change if the price level did change?arrow_forward
- Explain the concept of the spending multiplier.arrow_forwardGiven the information below, answer the questions that follow. C = $40 + 0.75Y I = $30 G = $40 X – M = $10 a) What is the equilibrium GDP? Explain why $550 is not the equilibrium. b) What is the marginal propensity to consume (MPC) in this question? (Explain) c) What is the multiplier in this question and explain the significance of the multiplier?arrow_forwardcan you please answer strating form D to F Given the information below, answer the questions that follow. C = $40 + 0.8Y I = $30 G = $40 X – M = -$10 a) What is the equilibrium GDP? Explain why $550 is not the equilibrium. b) What is the marginal propensity to consume (MPC) in this question? (Explain) c) What is the multiplier in this question and explain the significance of the multiplier? (Show all work) d) Assuming that the full employment level of output is $600, what kind of gap exists and how large is it? Explain e) If transfer payments increased by $10 and the price level did not change, what would the new equilibrium be? (Show all work) f) How would your answer to part (e) change if the price level did change?arrow_forward
- Assume the simple spending multiplier equals 10. Determine the size and direction of any changes of the aggregate expenditure line, real GDP demanded, and the aggregate demand curve for each of the following: Spending rises by $8 billion at each spending level Spending falls by $5 billion at each income level Spending rises by $20 billion at each income levelarrow_forwardCalculate aggregate demand if consumption expenditure is $2300 million and the investment Expenditure is $1000 millionarrow_forwardQuestion 3 of 16 Income and consumption changes for five people are shown in the table. Given this information, rank the marginal propensities to consume (MPC) for the five people from largest to smallest. Largest MPC Smallest MPC Answer Bank Bert Doug Eli Carter Al Name Income change Consumption change Al +$5,000+$5,000 +$3,000+$3,000 Bert +$2,500+$2,500 +$800+$800 Carter +$1,000+$1,000 +$800+$800 Doug −$2,500−$2,500 −$1,750−$1,750 Eli −$5,000−$5,000 −$2,000−$2,000arrow_forward
- Using the table below to answer the following questions. Assume all values represent trillions of dollars. Construct a graph of the Aggregate planned expenditure What is the equilibrium expenditure? Explain what happens at a real GDP of $4 trillion dollars. (Note the aggregate expenditures and the effects on inventories) What are your total autonomous expenditures? What is the marginal propensity to consume? Ignoring imports and income taxes, what is the multiplier? If investment increases by $1.5 trillion, what is the change in real GDP?arrow_forwardChapter 14 Explain the basic idea of the expenditure multiplier and the role consumers play.arrow_forwardConsider a hypothetical economy in which households spend $0.75 of each additional dollar they earn and save the remaining $0.25. The following graph shows the economy's initial aggregate demand curve (AD1AD1). Suppose the government increases its purchases by $3.75 billion.arrow_forward
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