Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 30, Problem 4IAPA
To determine
To find:
The value of disposable income, consumption expenditure and aggregate planned expenditure. Find the value of equilibrium expenditure.
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Students have asked these similar questions
7. 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 $450
billion, consumption is $375 billion, government purchases are $30 billion, and investment is $70 billion. When Real GDP is $500 billion, consumption
is $400 billion, government purchases are $30 billion, and investment is $70 billion.
Use the blue line (circle symbol) to plot the economy's total expenditure function within a simplified Keynesian framework.
TOTAL EXPENDITURE (Billions of dollars)
600
575
550
525
500
475
450
425
400
400
TP
O
425
X
NRGDP
O
450
475
500
525
REAL GDP (Billions of dollars)
550
575
600
TE
(?
What are the four categories of aggregate expenditure (demand)? Give an example of each.
9.1 Calculate the Marginal Propensity to Consume and the Marginal Propensity to Save. Fill in the blanks in the following table. Show that the MPC plus the MPS equals 1.
National Income & Real GDP (Y)
Consumption (C)
Saving (S)
MPC
MPS
$9,000
$8,000
$10,000
$8,600
$11,000
$9,200
$12,000
$9,800
$13,000
$10,400
Step 2: The Effect of Saving on Total Expenditures
The following table shows data for the economy before the decrease in saving. Suppose that the decrease in saving causes consumption to rise
from $280 million to $320 million. Assume Say's law holds in this economy.
Fill in the data for the economy after the decrease in saving.
Before Saving Decrease
$280 million
$200 million
$250 million
$500 million
$300 million
Consumption (C)
Investment (I)
Government Purchases (G)
Exports (EX)
Imports (IM)
As a result of the decrease in saving, total expenditures will
After Saving Decrease
$320 million
million
million
$500 million
$300 million
Chapter 30 Solutions
Foundations of Economics (8th Edition)
Ch. 30 - Prob. 1SPPACh. 30 - Prob. 2SPPACh. 30 - Prob. 3SPPACh. 30 - Prob. 4SPPACh. 30 - Prob. 5SPPACh. 30 - Prob. 6SPPACh. 30 - Prob. 7SPPACh. 30 - Prob. 8SPPACh. 30 - Prob. 9SPPACh. 30 - Prob. 1IAPA
Ch. 30 - Prob. 2IAPACh. 30 - Prob. 3IAPACh. 30 - Prob. 4IAPACh. 30 - Prob. 5IAPACh. 30 - Prob. 6IAPACh. 30 - Prob. 7IAPACh. 30 - Prob. 8IAPACh. 30 - Prob. 9IAPACh. 30 - Prob. 10IAPACh. 30 - Prob. 1MCQCh. 30 - Prob. 2MCQCh. 30 - Prob. 3MCQCh. 30 - Prob. 4MCQCh. 30 - Prob. 5MCQCh. 30 - Prob. 6MCQCh. 30 - Prob. 7MCQCh. 30 - Prob. 8MCQ
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