Using an income-expenditure diagram, use the infinite line and double-drop line tools to show the economy in equilibrium and mark that point E1. Use the copy tool to illustrate the impact of a decrease in lump-sum taxes of $150 billion on planned aggregate spending. Assume that the marginal propensity to consume is 0.5. Label the new aggregate expenditure curve AE2. Then, use the double-drop line tool to plot and label the new equilibrium (E2).
Using an income-expenditure diagram, use the infinite line and double-drop line tools to show the economy...
Draw a planned aggregate expenditure curve for an economy where autonomous expenditure is $200 billion and the marginal propensity to consume is equal to 0.50. Plot values for Actual Aggregate Expenditure' of $100, $200, $300, $400, $500, and $600. Instructions: Use the graphing tool to draw the planned aggregate expenditure curve by plotting points at each level of output (Y) starting with zero and ending with 500. Planned Aggregate Expenditure (PAE, billions of dollars) PAE = Y 500 Tools 450...
ASSIGNMENT # 3 Actual aggregate expenditure or output (Y) (billions of $) Consumption (C) (billions of $) Planned investment (billions of $) Government spending (G) (billions of $) Net exports (NX) (billions of $) Unplanned investment (inventory change) (billions of $) 500 300 150 100 50 600 350 700 400 800 450 900 500 For the table shown, answer the following questions: For each level of actual aggregate expenditure, calculate unplanned inventory investment. What is the equilibrium level of aggregate...
Exhibit 23-5 Spending 45-degree line E Expenditure line Income or Real GDP Reference: Ref 11-3 If spending was equal to the amount corresponding to point B in Exhibit 23-5, aggregate output would increase. aggregate output would decrease. spending is too high, and the expenditure line will shift down. the economy would be in equilibrium the marginal propensity to consume would increase.
10.) An economy has a marginal propensity to consume and Y* , income-expenditure equilibrium GDP, equals $500 billion. Given an autonomous increase in plannÄ—d investment of $10 billion, show the rounds of increased spending that take place by completing the accompanying table. The first and second rows are filled in for you. In the first row the increase of planned investment spending of $10 billion raises real GDP and YD by $10 billion, leading to an increase in consumer spending...
Consider two closed economies that are identical except for their marginal propensity to consume (MPC). Each economy is currently in equilibrium with real income and planned expenditure equal to $100 billion, as shown by the black points on the following two graphs. Neither economy has taxes that change with income. The grey lines show the 45-degree line on each graph.The first economy's MPC is 0.5. Therefore, its initial planned expenditure line has a slope of 0.5 and passes through the...
Problem 4 Consider the following economy: Consumption Expenditure 446,832 million Planned Investment Expenditure 346,877 million Government Expenditure 446,832 million Exports 402,443 million Imports 388,374 million Marginal Propensity to Save 0.3 Marginal Tax Rate 0.32 Autonomous Taxes 301,240 million Marginal Propensity to Import (nx) 0.04 (a) Calculate the equilibrium level of income. (0.5 mark) (b) Calculate autonomous consumption. (0.5 mark) (c) Calculate autonomous net exports. (0.5 mark) (d) Calculate autonomous planned expenditures. (0.5 mark) (e) Calculate the marginal leakage rate. (0.5 mark) (f) Assume that the...
The initial graph shows the IS1 and LM1 curves, as well as the initial equilibrium. In this question, you will consider the effect of a spending shock to the economy and consider the different outcomes that result from different responses in monetary policy. a. Suppose there is a decrease in planned investment by firms equal to 100. Furthermore, assume the marginal propensity to consume is 0.75. Determine exactly how far the IS curve would shift, then use the infinite line...
Check my world The table below shows some of the expenditure amounts in the economy of Arkinia. The MPC, the MTR, and the MPM are all constant, as are the values of the three injections. a. Complete the table below. I IM XN 30 Y T YD C $ II 50 100 60 -5 50 200 60 T T 130 | 10 | 50 300 88 TL 195 LEI 400 102 40 500 DI 325 OL 50 600 460 TD...
b. The value of equilibrium income is $ 600 c. At equilibrium, the value of total injections is $ _____ and of total leakages is $ ______ d. The value of the MPE in Arkinia is ____ . Round your answer to 2 decimal places. e. The value of the multiplier in Arkinia is ____ . Round your answer to 2 decimal places. f. Suppose that exports from Arkinia were to increase by $90. Draw the new aggregate expenditure function...
endrid-side Equiorum: Unemployment or Inflation? 1. Aggregate expenditure and income The following table shows consumption (C), investment (1), government purchases (G), and net exports (X-IM) in a hypothetical economy for various levels of real GDP (Y). Assume that the price level remains unchanged at all levels of income. All figures are in billions of dollars. 550 Compute total expenditure for each income level, and fill in the last column in the following table. Y c 1 G X -IM Total...