MACROECONOMICS FOR TODAY
10th Edition
ISBN: 9781337613057
Author: Tucker
Publisher: CENGAGE L
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Chapter 9, Problem 2SQ
To determine
The impact of lower AE than the GDP.
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Answer the following questions, which relate to the aggregate expenditures model:
Instructions: Enter your answer as a whole number.
a. If Ca is $130, lg is $60, X, is -$10, and G is $40, what is the economy's equilibrium GDP?
$
b. If real GDP in an economy is currently $250, Ca is $130, l is $60, Xn is –$10, and G is $40, will the economy's real GDP rise, fall, or
stay the same?
|(Click to select)
c. Suppose that full-employment (and full-capacity) output in an economy is $250. If Ca is $180, Ig is $60, Xn is -$10, and Gis
$40, what will be the macroeconomic result?
O There will be an inflationary expenditure gap and employment levels will be above the full-employment level.
O There will be an inflationary expenditure gap and employment levels will be below the full-employment level.
Which of the following components of aggregate expenditure is most subject to crowding out?
a. Consumption expenditures
b. Government purchases of goods and services
c. Imports
d. Investment spending
e. National saving
Answer the following questions, which relate to the aggregate expenditures model:a. If Ca is $100, Ig is $50, Xn is -$10, and G is $30, what is the economy’s equilibrium GDP?b. If real GDP in an economy is currently $200, Ca is $100, Ig is $50, Xn is -$10, and G is $30, will the economy’s real GDP rise, fall, or stay the same?c. Suppose that full-employment (and full-capacity) output in an economy is $200. If Ca is $150, Ig is $50, Xn is -$10, and G is $30, what will be the macroeconomic result?
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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- A $300 million decrease in investment spending will increase real GDP by more than $300 million. Is this a true statement? What is the relationship between investment spending and the GDP? I think that investment spending goes directly into the economy so I believe the answer to be true. But I am not sure.arrow_forwarda. The key idea of the aggregate expenditure model is that in any particular year, the level of GDP is determined mainly by A) investment spending. B) export spending. C) government spending. D) the level of aggregate expenditure. b. U.S. net export rises when A) the price level in the United States rises relative to the price level in other countries. B) the growth rate of U.S. GDP is slower than the growth rate of GDP in other countries. C) the value of the U.S. dollar increases relative to other currencies. D) the inflation rate is higher in the United States relative to other countries.arrow_forwardWhy are changes in inventories included as part of investment spending? Suppose inventories declined by $1 billion during 2008. How would this affect the size of gross private domestic investment and gross domestic product in 2008? Explain.arrow_forward
- Answer the following questions, which relate to the aggregate expenditures model: Instructions: Enter your answer as a whole number. a. If Ca is $110, Ig is $50, Xp is -$10, and Gis $30, what is the economy's equilibrium GDP? b. If real GDP in an economy is currently $210, Ca is $110, lg is $50, X, is -$10, and Gis $30, will the economy's real GDP rise, fall, or stay the same? (Click to select) c. Suppose that full-employment (and full-capacity) output in an economy is $210. If Ca is $160, Ig is $50, Xn is -$10, and Gis $30, what will be the macroeconomic result? There will be an inflationary expenditure gap and employment levels will be below the full-employment level. O There will be an inflationary expenditure gap and employment levels will be above the full-employment level.arrow_forwardIn the short-run aggregate expenditure model, if GDP is less than aggregate planned expenditures, output will a. decrease as business cut back on production due to rising inventory levels b. increase as business ramp up production due to falling inventory levels c. stay the same and prices will increasearrow_forwardExamine the graph above. Suppose that government increases its spending, shifting the aggregate expenditure line upwards. GDP increases from GDP1 to GDP2, and this amount is $550 billion. If the MPC is 0.8, calculate the difference between the points N and L to find out by how much the government spending changed.arrow_forward
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