A tabular approach to Keynesian equilibrium The following table shows some information on a hypothetical economy. The table lists real GDP, consumption (C), investment (I), government spending (G), net exports (X-M), and aggregate expenditures (AE). In this problem, assume that investment, government spending, and net exports are independent of the economy's real GDP level. Real GDP $400 $500 $600 $700 800 с $225 True $375 O False $525 X- I G M $100 $120 $30 $100 $120 $30 $100 $120 $30 $100 $120 $30 $100 $120 $30 $ $ AE $550 $700 $775 Unplanned Inventory Investment -$75 -$50 -$25 $0 $25 Using the numbers provided in the table, enter the correct numbers in the empty cells. Then, using the dropdown selection menus in the right-most column, indicate whether output will tend to increase, decrease, or remain in equilibrium at each level of real GDP in the table. (Note: The table uses negative numbers to indicate an unplanned inventory investment depletion and positive numbers to indicate an unplanned inventory investment ulation.) Direction of Real GDP and Employment True or False: The most fundamental assumption behind the aggregate expenditures model is that prices in the economy are flexible.

A tabular approach to Keynesian equilibrium The following table shows some information on a hypothetical economy. The table lists real GDP, consumption (C), investment (I), government spending (G), net exports (X-M), and aggregate expenditures (AE). In this problem, assume that investment, government spending, and net exports are independent of the economy's real GDP level. Real GDP $400 $500 $600 $700 800 с $225 True $375 O False $525 X- I G M $100 $120 $30 $100 $120 $30 $100 $120 $30 $100 $120 $30 $100 $120 $30 $ $ AE $550 $700 $775 Unplanned Inventory Investment -$75 -$50 -$25 $0 $25 Using the numbers provided in the table, enter the correct numbers in the empty cells. Then, using the dropdown selection menus in the right-most column, indicate whether output will tend to increase, decrease, or remain in equilibrium at each level of real GDP in the table. (Note: The table uses negative numbers to indicate an unplanned inventory investment depletion and positive numbers to indicate an unplanned inventory investment ulation.) Direction of Real GDP and Employment True or False: The most fundamental assumption behind the aggregate expenditures model is that prices in the economy are flexible.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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can you tell me which questions i've gotten wrong? This is a practice quiz that doesnt tell you the correct answers at the end. thanks 1- An increase in business investment spending has the same effect on the level of ad as an increase in the same amount of government spending. -true 2- If the government increased taxes by $10 at the same time it increased spending by $10 there would be no effect on the level of AD. 3- If social security payments to retirees increase, AD will increase and raise Y*. -true 4- Tax cuts in the classical range of the AS will stimulate output and unemployment -false 5- Increasing welfare payments by borrowing money to do so will increase AD- true 6- if the mpc increases, the multiplier decreases- false 7- if the mps increases the multiplier decreases -true 8- part of the cost of growing government budget deficits is and “opportunity cost” of what else could have been done with the money, particularly if the borrowing is used to increase consumption spending.…
4. a) Draw a TP-TE (or Keynesian cross) graph for South Africa. Suppose Real GDP is $425 billion while the Real GDP where TE=TP is $475 billions. total, Expenditure (billions) TE-TH HEL th I 1 45 425 Q2 475 Q1 TP - TE total Production (billions) b) If Real GDP is $425 billion, what will happen to inventories, to firm's production and to the Real GDP? Inventories will decrease and Production will increase GDP increases to $475 billion and real
2. A tabular approach to Keynesian equilibrium The following table shows some information on a hypothetical economy. The table lists real GDP, consumption (C), investment (I), government spending (G), net exports (X-M), and aggregate expenditures (AE). In this problem, assume that investment, government spending, and net exports are independent of the economy's real GDP level. Real GDP $400 $500 $600 $700 $ True $ O False с $225 $385 $545 X- I G M $100 $120 -$5 $100 $120 -$5 $100 $120 -$5 $100 $120 -$5 $100 $120 -$5 $ AE $520 $680 $760 Unplanned Inventory Investment -$40 -$20 $0 $20 $40 Using the numbers provided in the table, enter the correct numbers in the empty cells. Then, using the dropdown selection menus in the right-most column, indicate whether output will tend to increase, decrease, or remain in equilibrium at each level of real GDP in the table. (Note: The table uses negative numbers to indicate an unplanned inventory investment depletion and positive numbers to indicate an…
K The following equations describe consumption, investment, government spending, taxes, and net exports in the country of Economika. In Economika, equilibrium GDP is equal to $. (Round your asnwer the nearest dollar.) If real GDP in Economika is currently $4,850, which of the following is true? A. There will be an unplanned decrease in inventories, and real GDP will increase next period. OB. There will be an unplanned increase in inventories, and real GDP will increase next period. OC. There will be an unplanned decrease in inventories, and real GDP will decrease next period. O D. There will be an unplanned increase in inventories, and real GDP will decrease next period. OE. There will be no unplanned change in inventories, and real GDP will stay the same next period. C=200+0.80(Y-T) 1=400 G=350 T=350 X = 100
3. Suppose an economy had aggregate demand components with the following relationships: Consumption Spending, C-140 +0.60*(DY) Investment Spending, I-25 +0.15"Y Government Spending, G-0 Net Export Spending, X=0 Tax Collections, Tx = 0 a. What is the equilibrium income for this economy (Show your work)? b. If the Government decided to Increase G spending by 6, what would be the new equilibrium income for this economy (Show your work)? Page 2 bed tooing c. If instead the Government decided to Reduce Tx (taxes) by 10 (i.e., send checks to people), what would be the new equilibrium income for this economy (Show your work)? d. If instead the Government decided to Increase G spending and Increase Tx (taxes) by 20, what would be the new equilibrium income for this economy (Show your work)?
3. That is the difference between Government Expenditures (G) and Government Transfers (tr, part of net Taxes)? Why does this difference in the two ways the government "uses" its revenues matter for Keynesian policy?
THE AGGREGATE EXPENDITURE MODEL (IN THE SHORT RUN)YOU MUST SHOW YOUR CALCULATIONS IN THE SPACE BELOWFOR THE NEXT PROBLEM USE THE FOLLOWING FORMULA:CHANGE IN GDP = [ 1 / (1-MPC) ] * CHANGE IN GInitially, the economy is producing $13 trillion in goods and services and the government is spending $2 trillion.Then the government decides to increase its spending to $2.7 trillion. Compute the new equilibrium level of output. Assume that the marginal propensity to consume is 0.7 (MPC=0.7).
19. Which of the following statements concerning Keynesian analysis are true? Select one: a. Keynes's analysis started with the recognition that the total quantity demanded of an economy's output was the sum of three types of spending: consumer expenditure, planned investment spending, and government spending. Ob. Keynes recognized that equilibrium would occur in the economy when planned expenditure equals Actual expenditure O c All of the above are true. d. Keynes's analysis involves explaining why aggregate output is at a certain level by understanding what factors affect each component of aggregate demand and how the sum of these components could add up to an output smaller or greater than the economy is capable of producing
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2. A tabular approach to Keynesian equilibrium The following table shows some information on a hypothetical economy. The table lists real GDP, consumption (C), investment (I), government spending (G), net exports (X-M), and aggregate expenditures (AE). In this problem, assume that investment, government spending, and net exports are independent of the economy's real GDP level. X- Unplanned Inventory Real GDP C I G M AE Investment Direction of Real GDP and Employment $500 $300 $80 $60 $85 -$25 $600 $ $80 $60 $85 $600 $0 $700 $450 $80 $60 $85 $25 $800 $80 $600 $80 $60 $85 $60 $750 $50 $85 $825 $75 Using the numbers provided in the table, enter the correct numbers in the empty cells. Then, using the dropdown selection menus in the right-most column, indicate whether output will tend to increase, decrease, or remain in equilibrium at each level of real GDP in the table. (Note: The table uses negative numbers to indicate an unplanned inventory investment depletion and positive numbers to…
. Suppose an economy is represented by the following equations.Consumption function C = 100 + 0.8YdPlanned investment I = 38Government spending G = 75Exports EX = 25Imports IM = 0.05YdAutonomous Taxes T = 40Planned aggregate expenditure AE = C + I + G + (EX - IM)a. By using the above information calculate the equilibrium level of income for thiseconomy. b. Calculate the value of expenditure multiplier. c. Suppose that government spending is increased by 5, what will happen to theequilibrium income level?
O Macmillan Learning The graph shows the income-expenditure model for the country of Desireland, where AE represents aggregate expenditure. The Desirish government wants to stimulate the economy owing to a slowdown in economic activity and, as such, decides to increase infrastructure spending by $7.65 billion. Show the impact of this extra spending given a marginal propensity to consume (MPC) of 0.7 and a total tax take of 30%, for any changes in GDP. In this example, assume that there is no international trade or inflation, and that interest rates are fixed. Planned aggregate spending (in billions of dollars) 70 65 60 55 50 45 40 35 30 25 20 15 10 5 0 0 01- 5 10 15 20 25 30 35 40 45 50 Real GDP (in billions of dollars) 45 degree line A new socialist government is elected to Desireland and decides to increase direct spending even more, to total of $9.7 billion. What will be the total change in real GDP? Please provide the answer to the nearest whole billion. Planned AE 55 60 65 70…