Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 30, Problem 4SPPA
To determine
To explain:
The value of marginal propensity to consume and the marginal propensity to import, and to identity the equilibrium expenditure.
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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?
Explain the basic idea of the expenditure multiplier and the role consumers' play.
Consider the graph below:
Planned Aggregate Expenditure (PAE, billions of $)
1000
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100
0
100
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1
PAE 2
PAE Y
PAE₁
900
1000
Actual Aggregate Expenditure (Output or GDP, billions of $)
a. What is the expenditure multiplier in this economy?
b. What is the marginal propensity to consume in this economy?
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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