MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Question
Chapter 9, Problem 18SQ
To determine
The impact of the increase in the aggregate expenditure.
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Please refer to this question as you answer the one attached.
a) If government spending is increased to G=80,What happens to equilibrium income?explain using government spending multiplier what happens to imports?
the following information about an economy (all amounts are in USD
billion)
C = 100 + 0.8YD
T= -150 +0.25Y
I* = 60
Consumption expenditure
Taxes
Autonomous Investment
Government Spending
G= 80
a) Calculate the equilibrium level of aggregat output (Y)
b) Calculate the the government expenditure multiplier on output
c) Suppose that the government spending is reduced by USD 5 billion, calculate the
new equilibrium level of aggregate output using the government expenditure
multiplier on output.
The following graph shows the total expenditure line (TE) for an economy where current equilibrium output is $400 billion and potential output is $275 billion.
The economy is experiencing _________ (a contractionary gap, an inflationary gap) equal to $______ billion. To close the output gap, government purchases could _______ (increase, decreease) by _____ ($50, 150, 75) billion. Thus, the value of the multiplier for this economy is ___________ (1.6667, 1.4545, 0.6, 0.3125, 0.4545).
On the previous graph, shift the TE line to show the change in total expenditure necessary to close the output gap.
Chapter 9 Solutions
MACROECONOMICS FOR TODAY
Ch. 9.4 - Prob. 1YTECh. 9 - Prob. 1SQPCh. 9 - Prob. 2SQPCh. 9 - Prob. 3SQPCh. 9 - Prob. 4SQPCh. 9 - Prob. 5SQPCh. 9 - Prob. 6SQPCh. 9 - Prob. 7SQPCh. 9 - Prob. 8SQPCh. 9 - Prob. 9SQP
Ch. 9 - Prob. 10SQPCh. 9 - Prob. 1SQCh. 9 - Prob. 2SQCh. 9 - Prob. 3SQCh. 9 - Prob. 4SQCh. 9 - Prob. 5SQCh. 9 - Prob. 6SQCh. 9 - Prob. 7SQCh. 9 - Prob. 8SQCh. 9 - Prob. 9SQCh. 9 - Prob. 10SQCh. 9 - Prob. 11SQCh. 9 - Prob. 12SQCh. 9 - Prob. 13SQCh. 9 - Prob. 14SQCh. 9 - Prob. 15SQCh. 9 - Prob. 16SQCh. 9 - Prob. 17SQCh. 9 - Prob. 18SQCh. 9 - Prob. 19SQCh. 9 - Prob. 20SQ
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