The economy is experiencing would require a billion with the absolute value of the gap equal to $ in government spending. Thus the value of the multiplier for this economy is billion. Closing the income gap On the graph, shift the PE line to show the change in the planned expenditure line necessary to close the income gap.
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- Autonomous Consumption R535mMarginal propensity to consume is 0.75Investment Spending R322mGovernment Spending R300mImports R175m + 0.08YExports R283mTaxes = 0.1YFull employment level of output is R3 483m Calculate the equilibrium level of income in this economy.The following graph plots the planned expenditure line (PE) for an economy in which current equilibrium income is $400 billion and the full- employment income level is $650 billion. The graph also plots a 45 degree line on the same coordinate pair. REALEXPENDITURE (Billions of dollars) 800 700 600 500 400 300 200 100 0 0 100 200 300 400 45-degree line PE PE Full-Employment Income 500 INCOME (Billions of dollars) The economy is experiencing would require a $ 600 700 800 .The absolute value of the income gap is equal to $ billion. Closing the gap billion in government spending. Thus the value of the multiplier for this economy is On the graph, shift the PE line to show the change in the planned expenditure line necessary to close the income gap.Imagine there is a consumption smoother (also known as a PIH consumer) who expectsto live for another 40 years and to work for another 30 years. They just learned thatthey will receive a permanent pay increase from their job of $800. How much extra dothey consume this year? What is their marginal propensity to consume?
- Question 28 Use the graph given below to answer this question. Assume that the MPC is 0.8. How much money does the government need to spend to move the economy to full- employment? Price Level LRAS SRAS P1 AD Real GDP or NI $500 $800 O al $60 O b) $5 Od s225 Od) $30018. What will be the level of consumption spending at an income level of 36? a) 30 b) 24 c) 28 d) 16 e) 8The following graph shows the aggregate expenditures line (AE) for an economy where current equilibrium output is $400 billion and full-employment output is $650 billion. AGGREGATE EXPENDITURES (Billions of dollars) 800 700 600 500 400 300 200 100 0 0 100 45-degree line 200 300 400 500 600 REAL GDP (Billions of dollars). The economy is experiencing a require a s billion AE Full-employment GDP 800 700 AE ? billion. To close the GDP gap would GDP gap with the absolute value of the gap equal to s in government spending. Thus the spending multiplier for this economy is On the graph, shift the AE line to show the change in the aggregate expenditures line necessary to close the GDP gap.
- Autonomous Consumption R535mMarginal propensity to consume is 0.75Investment Spending R322mGovernment Spending R300mImports R175m + 0.08YExports R283mTaxes = 0.1YFull employment level of output is R3 483m Calculate the value of induced imports in thiseconomy, given the equilibrium level of output.An economy is currently in equilibrium. The following figures refer to elements in its national income accounts. Elements £ bilions Consumption (total) 70 Investment Government Expenditure 7 Imports 10 Exports 8 Table 2 A) What is the current equilibrium level of income? B) What is the level of injections? What is the level of withdrawals? C) If national income now rises by £12 billion, and as a result, the consumption of domestically produced goods rises to £68 billion. Calculate the marginal propensity to consume (MPC). D) What is the value of the multiplier? E) Comment on the results in part (c) and (d).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…
- Suppose an economy can be represented by the folowing table, in which employment is in millons of workers and GDP and AE are expressed in billions of dollars: Employment 100 Real GDP Aggregate Expenditures 1275 1350 1425 1500 1575 1650 1200 105 1300 1400 1500 1600 1700 110 115 120 125 fut employment is 120 milion workers? What is its what kind of expenditure oap exists size? Suppose government spending, taxes, and net exports ane all independent of the level of rcal GDP. What is the multplier an ths economy? below the econemy's potential, what is the size of the recessionary expenditure qaptAdjust the following graph by shifting either the curve or the point on the curve to illustrate a decrease in income tax rates. ? PRICE LEVEL REAL GDP AD=C+I+G+(X-M) AD Which of the following formulas best defines GDP using the expenditure method? O AD I+G+(X-M) O AD=C+I+(X-M) O AD C-I-G+(X-M) ADIII. In a particular very small region, the consumer price index, C, depends on the current value of gross regional domestic expenditure E, number of people living in poverty P, and the average number of household members in a family F, by the following formula: -Ep e C = 100 + F If it is known that the gross regional domestic expenditure is decreasing at a rate of PHP 50 per year, and the number of people living in poverty and the average number of household members in a family are increasing at 3 and 1 per year, resp., how fast does the consumer price index change per year at the moment when E = 1,000, P = 200, andF = 5?