An economy is described as follows: C = 400 + 0.6(Y – T) I p = 200 G = 200 NX = 60 T = 100 Y* = 2,100 a. For the economy described above, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. Instructions: Enter your responses as absolute values. Autonomous expenditure: 800 correct. Multiplier: 2.5 correct. Short-run equilibrium output: 2000 correct. There is a recessionary output gap in the amount of 100 correct.. SOLVE PART (b) b. Illustrate this economy’s short-run equilibrium on a Keynesian cross diagram. Instructions: On the graph below, use the line tool 'PAE' to draw the aggregate expenditure line using the points at Y = 1,500 and Y = 2,500 only. Then use the point tool 'Short-term eq.' to identify the equilibrium level of income and expenditure.

An economy is described as follows: C = 400 + 0.6(Y – T) I p = 200 G = 200 NX = 60 T = 100 Y* = 2,100 a. For the economy described above, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. Instructions: Enter your responses as absolute values. Autonomous expenditure: 800 correct. Multiplier: 2.5 correct. Short-run equilibrium output: 2000 correct. There is a recessionary output gap in the amount of 100 correct.. SOLVE PART (b) b. Illustrate this economy’s short-run equilibrium on a Keynesian cross diagram. Instructions: On the graph below, use the line tool 'PAE' to draw the aggregate expenditure line using the points at Y = 1,500 and Y = 2,500 only. Then use the point tool 'Short-term eq.' to identify the equilibrium level of income and expenditure.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.B: The Multiplier With Variable Imports

Problem 3TY

See similar textbooks

Similar questions

For the following economy, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. By how much would autonomous expenditure have to change to eliminate the output gap? C = 550 + 0.75 (Y – T ) I p = 200 G = 200 NX = 60 T = 180 Y* = 3,400 Instructions: Enter your responses as absolute numbers. Autonomous expenditure: 875Multiplier: 4Short-run equilibrium output: 3500 There is (Click to select) an expansionary output gap in the amount of 100.(DO THIS PART) Autonomous expenditure would need to decrease by________ to eliminate the output gap.
For the following economy, find autonomous expenditure, the multiplier, short-run equilibrium output, and the output gap. By how much would autonomous expenditure have to change to eliminate the output gap? C = 2,500 + 0.75 (Y – T ) I p = 1,500 G = 2,000 NX = 300 T = 1,500 Y* = 19,900 Instructions: Enter your responses as whole numbers. Autonomous expenditure: 5175Multiplier: 4Short-run equilibrium output: 20,700Output gap: (DO THIS PART)Autonomous expenditure would need to (Click to select) decrease increase by ____________to eliminate the output gap. (DO THIS PART
Assume the economy is initially in goods market equilibrium with all variables at their expected levels. Considering only the short run implications for the economy, which of the following statements are true: a) Following a cut in the proportional tax rate, national income rises and the budget balance improves. b) If the multiplier estimated by researchers from the data is less than one, then following a rise in government spending, output is lower in the new equilibrium. + c) Following a rise in households' target wealth, both consumption and output are lower in the new equilibrium. ÷ 수
In an economy, autonomous consumption expenditure is $50 billion, investment is $200 billion, and government expenditure is $250 billion. Exports are $500 billion and imports are $450 billion. Assume that net taxes and imports are autonomous and price level is fixed. a)What is the consumotion function? b)What is the equation of the aggregate expenditure curve? c)Calculate equilibrium expenditure. d)Calculate the multiplier. e)If investment decreases to $150 billion, what is the change in equilibrium expenditure ?
equilibrium is important in the simple expenditure model so we need to know the following: what is the signal or indicator in the economy that will tell us we are not in equilibrium? What value for that signal will assure us we are in equilibrium? Explain why. ( Please solve whole question ASAP . I will definitely Rate your answer )
The following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $50 billion, and that the marginal propensity to consume (MPC) is 0.667, or 2/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Income: Real GDP Disposable (After Tax) Income C Ip G Planned Expenditures (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 0 0 50 100 50 100 100 50 200 100 50 300 100 50 400 100 50 500 100 50…
Suppose that country Y is identical to country Z, with the exception that country Y's population has a lower marginal propensity to consume than country Z. Initially, both countries have the same level of real GDP. The diagram shows the expenditure curve for country Y. Using the line drawing tool, draw the expenditure curve of country Z in Figure 1. Label your curve 'Ez'. Carefully follow the instructions above and only draw the required object. Figure 1 Planned Expenditure ($, trillions) Real GDP, Y ($, trillions) Ex Select ✓ Line
The following table shows consumption (C), investment spending (I), and government purchases (G), for some hypothetical economy at several levels of income (reported in billions of dollars of real GDP). Assume that in this economy, income is taxed at a rate of 25%, base consumption is $25 billion, and that the marginal propensity to consume (MPC) is 0.333, or 1/3. Further assume that this economy is closed, that is, there is no international trade and so net exports are always equal to zero. Use the given information to fill in disposable income, consumption, and planned expenditures in the following table. Income: Real GDP Disposable (After Tax) Income C Ip G Planned Expenditures (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) (Billions of dollars) 0 0 25 150 50 100 150 50 200 150 50 300 150 50 400 150 50 500 150 50…
True or False? In the long-run general equilibrium, MPK = MPL.
Suppose that the consumer’s consumption demand function is given by Cd = 0.8(Y−T)+10. Investment is Id = 20, government expenditure is G = 10, and tax is T = 10. What is the equilibrium GDP (income)? Suppose that government expenditure increases by 10 units while tax is unchanged. How will GDP change? What is the multiplier? Suppose that government expenditure increases by 10 units while tax also increases by 10 units. How will GDP change? What is the multiplier?
Construct the multiplier model using the consumption function: and an investment spending I =20 (assume no G and NX): a) How much is the expenditure multiplier? b) How much is the equilibrium output with the given C and I? c) If government will increase its spending G = 20, how much will be the change in Y?
If your income increases from $40,000 to $48,000 and your consumption increases from $35,000 to $39,000, your marginal propensity to consume (MPC) is