An economy is described by the following equations: C = 80+0.9 (Y-7) IP G = 150 NX = 30 T = 180 Y* = 1,800 The multiplier in this economy is 10. a. Find a numerical equation relating planned aggregate expenditure to outpu Instructions: Enter your response for mpc rounded to one decimal place. PAE = + Y = 100 b. Construct a table to find the value of short-run equilibrium output. Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Output Planned aggregate expenditure Y (PAE) 1,780 1,880 1,980 2,080 2,180 Y- PAE Short-run equilibrium output is. c. By how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have to change? In order to eliminate any output gap, government purchases would have to be (Click to select) reduced increased by . In order to eliminate any output gap, taxes would have to be (Click to select) increased reduced by . d. If y* = 2,070, then by how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have change? In order to eliminate any output gap, government purchases would have to be (Click to select) reduced increased by . In order to eliminate any output gap, taxes would have to be (Click to select) increased reduced by
An economy is described by the following equations: C = 80+0.9 (Y-7) IP G = 150 NX = 30 T = 180 Y* = 1,800 The multiplier in this economy is 10. a. Find a numerical equation relating planned aggregate expenditure to outpu Instructions: Enter your response for mpc rounded to one decimal place. PAE = + Y = 100 b. Construct a table to find the value of short-run equilibrium output. Instructions: If you are entering any negative numbers be sure to include a negative sign (-) in front of those numbers. Output Planned aggregate expenditure Y (PAE) 1,780 1,880 1,980 2,080 2,180 Y- PAE Short-run equilibrium output is. c. By how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have to change? In order to eliminate any output gap, government purchases would have to be (Click to select) reduced increased by . In order to eliminate any output gap, taxes would have to be (Click to select) increased reduced by . d. If y* = 2,070, then by how much would government purchases have to change in order to eliminate any output gap? By how much would taxes have change? In order to eliminate any output gap, government purchases would have to be (Click to select) reduced increased by . In order to eliminate any output gap, taxes would have to be (Click to select) increased reduced by
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section: Chapter Questions
Problem 7TY
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Transcribed Image Text:An economy is described by the following equations:
C = 80+ 0.9 (Y-7)
IP
= 100
G
NX
T
= 180
Y* = 1,800
The multiplier in this economy is 10.
a. Find a numerical equation relating planned aggregate expenditure to output.
Instructions: Enter your response for mpc rounded to one decimal place.
PAE = + Y
= 150
Output
Y
= 30
b. Construct a table to find the value of short-run equilibrium output.
Instructions: If you are entering any negative numbers be sure to include a
negative sign (-) in front of those numbers.
1,780
1,880
1,980
2,080
2,180
Planned aggregate expenditure
(PAE)
Y-
PAE
Short-run equilibrium output is.
c. By how much would government purchases have to change in order to
eliminate any output gap? By how much would taxes have to change?
In order to eliminate any output gap, government purchases would have to
be (Click to select) reduced increased by .
In order to eliminate any output gap, taxes would have to be (Click to
select) increased reduced by .
d. If y* = 2,070, then by how much would government purchases have to
change in order to eliminate any output gap? By how much would taxes have to
change?
In order to eliminate any output gap, government purchases would have to
be (Click to select) reduced increased by .
In order to eliminate any output gap, taxes would have to be (Click to
select) increased reduced by .
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