Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Chapter 30, Problem 5IAPA
To determine
To explain:
The process that takes the economy to equilibrium expenditure, if real GDP is $30 trillion and if $40 trillion.
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3@
An economy has neither imports nor income taxes. The MPC is 0.75 and the real GDP is $120 billion. The government increases expenditures by $4
billion.
The multiplier is _____ and the change in real GDP from the increase in government expenditures is _____ billion.
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
(?
Economics
1. Explain how each of the following changes
would shift the aggregate expenditure function
and the aggregate demand curve.
a) An increase in government expenditures (G).
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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