An economy is described by the following equations: C = 1,800+ 0.6 (Y - T) IP = 900 G = 1,500 NX = 100 T = 1,500 y* = 9,000 a. Find a numerical equation linking planned aggregate expenditure to output. Instructions: Round the value for mpc to one decimal place. PAE= b. Find autonomous expenditure and induced expenditure in this economy. Instructions: Round the value for mpc to one decimal place. Autonomous expenditure: Induced expenditure: Y Y
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- An economy is described by the following equations: C= 1500 + 0.75(Y - T) po = 800 G= 1500 X = 100 M=0 T=1500 †=0 Y* = 12000 a) Find a numerical equation linking planned aggregate expenditure to output. b) Find its exogenous expenditure and induced expenditure in this economyAn economy is described by the following equations: C - 1,800 + 0.6 (Y - T) - 900 G - 1,500 NX - 100 T - 1,500 Y* - 9,000 IP a. Find a numerical equation linking planned aggregate expenditure to output. Instructions: Enter the value for mpc rounded to one decimal place. PAE= ]+O Y b. Find autonomous expenditure and induced expenditure in this economy. Instructions: Enter the value for mpc rounded to one decimal place. Autonomous expenditure: Induced expenditure:An economy is described by the following equations: = 2,000 + 0.5 (Y - T) = 900 IP G = 1,800 NX = 100 T 1,800 8,200 Y* = a. Find a numerical equation linking planned aggregate expenditure to output. Instructions: Round the value for mpc to one decimal place. PAE= Y b. Find autonomous expenditure and induced expenditure in this economy. Instructions: Round the value for mpc to one decimal place. Autonomous expenditure: Induced expenditure: Y
- Assume you have the following model of the expenditure sector: AD = C + I + G + NX C = Co + cYD YD = Y - TA + TR TA = TAo TR = TRo I = Io G = Go NX = NXo If a change in exports by deltaNX = - 200 is accompanied by a change in consumption by ∆C = - 800, what is the size of the expenditure multiplier?Consider an economy where the aggregate planned expenditure (AE) components are given by: Consumption (C) = 1000 + 0.8Y Investment (I) = 200 Government Expenditure (G) = 250 Exports (Ex) = 400 Imports (Im) = 200 + 0.133Y Write the AE equation (simplified). Identify the autonomous component and the induced component. Graph the AE curve. Find and identify on the graph the equilibrium expenditure. Show on your graph the effect of an increase of 60 in government expenditure and find the new equilibrium expenditure. Find the expenditure multiplier.Consider the aggregate expenditure model. Suppose there is an increase in real GDP in the economy. Classify each economic variable as to whether it increases, decreases, or remains unchanged when real GDP increases. Increases Decreases Answer Bank Does not change consumption marginal propensity to consume government spending investment aggregate expenditures net exports imports natural rate of output exports
- If the output level is such that the Y=AE line (45-degree line) is above the aggregate expenditure line, which of the following is true? Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a Aggregate expenditure is greater than output, so inventories will decrease and output will increase. b Aggregate expenditure is less than output, so inventories will increase and output will decrease. Aggregate expenditure is less than output, so inventories will decrease and output will increase. d Aggregate expenditure is greater than output, so inventories will increase and output will decrease.Draw a planned aggregate expenditure curve for an economy where autonomous expenditure is $200 billion and the marginal propensity to consume is equal to 0.50. Plot values for 'Actual Aggregate Expenditure' of $100, $200, $300, $400, $500, and $600. Instructions: Use the graphing tool to draw the planned aggregate expenditure curve by plotting points at each level of output (Y) starting with zero and ending with 500. Planned Aggregate Expenditure (PAE, billions of dollars) PAE = Y 500 450 400 350 300 250 200 150 100 50 100 200 300 400 500 Actual Aggregate Expenditure (Y, billions of dollars) Tools / PAE Ⓡa) About Country A, what is your estimate of the country's marginal propensity to consume (MPC) based on the following information on its GDP (Y) and the components thereof (in billion dollars) for two past years? Show calculation. Year 1 Year 2 c) GDP C I 11200 8000 2200 12000 8500 2400 G 800 880 The next few parts are about Country B, whose government plans to cut taxes by $24 billion as a measure to fight the current recession. The marginal propensity to consume (MPC) in Country B is known to be 34. There will be no crowding-out effect. e) NX 200 220 b) What is the initial effect (in billion dollars) of the tax cut on Country B's aggregate demand? (The "initial effect" here refers to the effect on AD after only the first round of increased spending.) What is the total effect of the tax cut on aggregate demand? Explain why it is different from the initial effect. d) How does the total effect of this $24 billion tax cut compare to the total effect of a $24 billion increase in…
- Y=E Autonomous expenditure = 3500 Equilibrium income = 9800 Full employment level of income is = 14000 i. Illustrate the above using a well labelled diagram. ii. What is the value of the multiplier in this economy? iii. Give the equation of the aggregate expenditure line.Expenditure Multipliers 1) List the four components of aggregate expenditure. Explain the two-way link with real GDP.Calculate the value of consumption expenditure from the following:- National income = $6000 Autonomous consumption = $1000 Marginal propensity to consume = 0.80