Foundations of Economics (8th Edition)
8th Edition
ISBN: 9780134486819
Author: Robin Bade, Michael Parkin
Publisher: PEARSON
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Question
Chapter 30, Problem 5MCQ
To determine
To explain:
The option that correctly states that the effect on economy if real GDP exceeds or is less than planned expenditure.
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Click on the icon to read the news clip, then complete the following steps.
Business inventories fall when real GDP rises because
1800-
1600-
Aggregate expenditure (billions of 2002 dollars)
○ A. inventories are falling from above target to their target levels
1400-
B. firms put more production time into producing consumption goods and
services
OC. firms put more production time into producing exports
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OD. both B and C are correct
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The graph shows the aggregate planned expenditure curve.
Draw a new AE curve to show the effect of an increase in exports and business
investment. Label it AE₁.
8004
800
1000
1200
1400
45 degree line
G
AE
1600
1800
Draw a point at the new equilibrium expenditure.
Draw an arrow along the new AE curve to show the effect of the increase in real
GDP on consumption expenditure.
Real GDP (billions of 2002 dollars)
>>> Draw only the objects specified in the question.
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News clip
Business Inventories Decline, GDP Rises
Real gross domestic product (GDP)…
Explain the basic idea of the expenditure multiplier and the role consumers' play.
Using the table below, answer the following question:
Real GDP ConsumptionPlanned
(Y)
GovernmentNet
Aggregate
of
Investment purchases Exports
(G)
(C)
Expenditure
(AE)
(1)
(NX)
650
85
195
90
320
690
750
145
195
90
320
750
850
205
195
90
320
810
950 265
195
90
320
870
Find the value of the multiplier in this economy? Show your calculations.
Answer:
Give your reasons
A-
в I
Fr
of
II
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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- Real GDP Consumption Planned Investment Government Purchases Net Exports $5,000 $4,500 $500 $325 -125 6,000 5,300 $500 $325 -125 7,000 6,100 $500 $325 -125 8,000 6,900 $500 $325 -125 3 A Answer the questions based on the table below. The values are in millions of dollars. What is the equilibrium level of real GDP? What is the MPC? If potential GDP is $7,000 million, is the economy at full employment? If not, what is the condition of the economy? If the economy is not at full employment, by how much should government spending increase so that the economy can move to the full employment level of GDP?arrow_forwardIf an economy were already at its potential GDP (ie its full-employment GDP), what would happen to the value of the multiplier? please help asap thank uarrow_forwardUse the diagram to the right to answer the following: a. The equilibrium value of real GDP is $ trillion. (Enter your response as a whole number.) b. The MPC is equal to (Enter your response rounded to two decimal places.) c. The multiplier is equal to (Enter your response rounded to one decimal place.) d. What is the value of unplanned changes in inventories when real GDP has each of the following values? (Enter your responses rounded to one decimal place and include a minus sign if necessary.) GDP $10 trillion $12 trillion $14 trillion Unplanned Inventories trillion trillion trillion C Aggregate Expenditure, AE ($, trillions) 24.0- 22.0 ≈ ≈ ¦ CO 20.0- 18.0- 16.0- 14.0- 12.0+ 10.0- 8.0- 6.0- 4.0- 2.0- 0.0- O. 13.6 12.0 10.4 0 45° -~ 2 4 AE 10:12:14 10 12 14 16 18 20 22 24 6 8 Real GDP, Y ($, trillions) Garrow_forward
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