Assume the Potential GDP is $15 trillion dollars. Use the table below to answer the following questions. Assume all values represent trillions of dollars. Use the table to create two graphs: 1. aggregate expenditure model and 2. an aggregate supply aggregate demand model. Note that the equilibrium in the table above will determine your real GDP and your potential GDP should be plotted in both graphs. What type of macroeconomic equilibrium does this economy reflect? Note that the multiplier is 2 because this economy has imports. If Investment expenditures increase by $2.5, how much does GDP increase? Does the increase in investment expenditures from part C result in a full employment equilibrium? Why? Graphically show the effects from part C in our Aggregate Expenditure Model and Aggregate Supply-Aggregate Demand Model.
Assume the Potential GDP is $15 trillion dollars. Use the table below to answer the following questions. Assume all values represent trillions of dollars. Use the table to create two graphs: 1. aggregate expenditure model and 2. an aggregate supply aggregate demand model. Note that the equilibrium in the table above will determine your real GDP and your potential GDP should be plotted in both graphs. What type of macroeconomic equilibrium does this economy reflect? Note that the multiplier is 2 because this economy has imports. If Investment expenditures increase by $2.5, how much does GDP increase? Does the increase in investment expenditures from part C result in a full employment equilibrium? Why? Graphically show the effects from part C in our Aggregate Expenditure Model and Aggregate Supply-Aggregate Demand Model.
Chapter19: Money Creation
Section19.3: How Monetary Policy Creates Money
Problem 1YTE
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Assume the Potential GDP is $15 trillion dollars. Use the table below to answer the following questions. Assume all values represent trillions of dollars.
- Use the table to create two graphs: 1. aggregate expenditure model and 2. an
aggregate supply aggregatedemand model. Note that the equilibrium in the table above will determine your real GDP and your potential GDP should be plotted in both graphs.
- What type of
macroeconomic equilibrium does this economy reflect?
- Note that the multiplier is 2 because this economy has imports. If Investment expenditures increase by $2.5, how much does GDP increase?
- Does the increase in investment expenditures from part C result in a full
- employment equilibrium? Why?
- Graphically show the effects from part C in our Aggregate Expenditure
- Model and Aggregate Supply-Aggregate Demand Model.
Transcribed Image Text:A
B
C
D
EF
Real GDP
Y
0.00
5.00
10.00
15.00
20.00
25.00
Consumption
Expenditure
C
1.00
4.00
7.00
10.00
13.00
16.00
Investment
I
2.00
2.00
2.00
2.00
2.00
2.00
Government
Expenditure
G
1.50
1.50
1.50
1.50
1.50
1.50
I
Exports
X
1.00
1.00
1.00
1.00
1.00
1.00
Imports
M
0.50
1.00
1.50
2.00
2.50
3.00
Aggregate
Expenditures
AE
5.00
7.50
10.00
12.50
15.00
17.50
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