Macroeconomics
13th Edition
ISBN: 9780134735696
Author: PARKIN, Michael
Publisher: Pearson,
expand_more
expand_more
format_list_bulleted
Question
Chapter 28, Problem 31APA
To determine
Illustrate the graph and identify the effect on aggregate expenditure and aggregate
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
13:06 * O O •
A O * l 70%i
Answers > Economics > Macroeconomics
Question #102948
In the circular flow of income and
spending, that is, the basic flow of
income and spending between
households and firms
supplemented by the foreign,
financial and government
se
rs...
1. Exports are leakage from the
circular flow
2. Savings are injections into the
circular flow
3. Imports are injections into the
circular flow
4. Taxes are leakages from the
circular flow
B. If the South African reserve
Bank decides to decrease the
repo rate, the quantity of money
created will. . (Ceteris
paribus).
Chat
1
Dooreace
II
Use the following equations for exercises 16-18.
C = $100 + .8Y
I = $200
G = $250
X = $100 – .2Y
16. What is the equilibrium level of real GDP?
17. What is the new equilibrium level of real GDP
if government spending increases by $150?
18. What is the new equilibrium level of real GDP if
government spending and taxes both increase by $150?
B
the cnonding and tax revenue
The table given below reports the value of real GDP and its components consumption (C), investment (I), exports,
and imports for two consecutive years in an economy.
Table 10.3
Equilibrium Real
Exports
Imports
GDP
Year 1
$9,350
$7,500
$1,350
$1,800
Year 2
$11,450
$8,900
$2,350
$1,600
Assume that government spending is zero for this economy.
Refer to Table 10.3. Assume that the economy is at equilibrium in both years, and that government spending is zero
for this economy. The change in investment spending from year 1 to year 2 is:
$1,800.
$450.
O $945.
$214.
$2,100.
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
Knowledge Booster
Similar questions
- nal U.S. Households Added $2.35 Trillion in Wealth The Federal Reserve reported that household wealth increased by $2.35 trillion or $20.000 per household in the first quarter of 2017. This rise is the largest since 2004. The rise came from a 5.5 percent gain in the Standard & Poor's 500 Index and house price appreciation. Separately, the Bureau of Economic Analysis reported that consumption expenditure increased by $56 billion in the first quarter of 2017 Sources: Bloomberg, June 8, 2017, and the Bureau of Economic Analysis Draw an assumed consumption function for the last quarter of 2016 and label it Draw an assumed point at which consumers were in that quarter. Draw an assumed consumption function for the first quarter of 2017 and label it Draw an assumed point at which consumers were in that quarter. 13.300 13.250 13.200 13.50 13,100 15,000 Consumption expenditure (bllions of 2009 dollars) 13,000- 15.000 15.050 465100 150 16.00 15.250 15.300 Disposable income (billions of 2000…arrow_forwardUse the following equations for exercises 16–18. C = $100 + .8Y I = $200 G = $250 X = $100 – .2Y 16. What is the equilibrium level of real GDP? 17. What is the new equilibrium level of real GDP if government spending increases by $150? 18. What is the new equilibrium level of real GDP if government spending and taxes both increase by $150?arrow_forwardUse the following information on economy X to answer the questions below.Consumption function: C = 250 + 0.8Y Investment spending: I = 150 Government spending: G = 500 Exports of goods and services: X = 200 Imports of goods and services: Z = 150 Proportional tax rate: t =25%Full employment level of income = 3575 1. Calculate the equilibrium income for the economy. 2. Calculate the change in government spending required to reach (3) full employment level of income.arrow_forward
- The table given below reports the value of real GDP and its components consumption (C), investment (I), exports, and imports for two consecutive years in an economy. Table 10.3 Equilibrium Real C Exports Imports GDP Year 1 $9,350 $7,500 $1,350 $1,800 Year 2 $11,450 $8,900 $2,350 $1,600 Assume that government spending is zero for this economy. Refer to Table 10.3. Assume that the economy is at equilibrium in both years, and that government spending is zero for this economy. The value of imports in year 1 is:arrow_forwardQ1:You are given the following income-expenditures model for an economy : Consumption C = 300 + .64Yd Tax (T) = $60 Government expenditure G = $100 Investment (I) = $120 From above data calculate the follows: 1. Equilibrium level of income 2. At the equilibrium level of income, what is the amount of consumption?arrow_forwardeconomic The hypothetical information in the following table shows what the situation will be in 2016 if the government does not use fiscal policy: table (image) a. If the government wants to move real GDP to its potential level in 2016, should it use expansionary policy or contractionary policy? In your answer make sure you explain whether the government should be increasing or decreasing government purchases and taxes.b. If the government is successful in moving real GDP to its potential level in 2016, state whether each of the following will be higher, lower or the same as it would have been if they had taken no action: i. Real GDP ii. Potential GDP iii.The inflation rate iv.The unemployment rate.c. Draw a dynamic aggregate demand and aggregate supply graph to illustrate your answer. Make sure that your graph contains LRAS curves for 2015 and 2016; SRAS curves for 2015 and 2016; AD curves for 2015 and 2016, with and without fiscal policy action; and equilibrium real GDP and the…arrow_forward
- Chapter 14 Explain the basic idea of the expenditure multiplier and the role consumers play.arrow_forwardINTEREST RATE (Percent) Supply Demand LOANABLE FUNDS (Billions of dollars) Demand Supply ? Scenario 1: Suppose savers either buy bonds or make deposits in savings accounts at banks. Initially, the interest income earned on bonds or deposits is taxed at a rate of 20%. Now suppose there is an increase in the tax rate on interest income, from 20% to 25%. Shift the appropriate curve on the graph to reflect this change. This change in the tax treatment of interest income from saving causes the equilibrium interest rate in the market for loanable funds to and the level of investment spending to Scenario 2: An investment tax credit effectively lowers the tax bill of any firm that purchases new capital in the relevant time period. Suppose the government repeals a previously existing investment tax credit. Shift the appropriate curve on the graph to reflect this change. The repeal of the previously existing tax credit causes the interest rate to investment to Scenario 3: Initially, the…arrow_forwardWhat is the difference between tax cuts imposed on higher-income households compared with lower- and middle-income households? Discuss the implications for the multiplier and the effectiveness of the tax cuts for boosting GDP.arrow_forward
- Use the following information on economy X to answer the questions below.Consumption function: C = 250 + 0.8YInvestment spending: I = 150Government spending: G = 500Exports of goods and services: X = 200Imports of goods and services: Z = 150Proportional tax rate: t =25%Full employment level of income = 3575Q.4.1.4 Calculate the change in government spending required to reach full employment level of income.arrow_forwardExplain graphically the determination of equilibrium GDP for a private economy through the aggregate expenditures model. Now add government purchases (any amount you choose) to your graph, showing its impact on equilibrium GDP. Finally, add taxation (any amount of lump-sum tax that you choose) to your graph and show its effect on equilibrium GDP. Looking at your graph, determine whether equilibrium GDP has increased, decreased, or stayed the same given the sizes of the government purchases and taxes that you selected.arrow_forwardWhich of the following correctly describes how a decrease in the price level affects consumption spending? Select one: a. A decrease in the price level raises real wealth, which causes consumption to increase. b. A decrease in the price level decreases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. c. A decrease in the price level increases the amount of money a household needs to buy goods and so raises the interest rate, which causes consumption to increase. d. A decrease in the price level lowers real wealth, which causes consumption to decrease.arrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
