Explain fully the role played by unplanned investment in inventories in determining equilibrium in the Keynesian...
Explain fully the role played by unplanned investment in inventories in determining equilibrium in the Keynesian model. Use the examples of AD > GDP and AD < GDP to illustrate your answer. Note that in your textbook AD = C + I + G + NX is the same as AE.
Homework Answers
Equilibrium will exist where the aggregate demand ( AD) is equal to the GDP of the country. The Diversion of AD from GDP would cause fluctuations in economic activities.
If AD is larger than GDP, there will be overheating of the economy and inflationary pressure would develop. There will be an unplanned fall in inventory level.
Further, if AD is less than GDP, the demand would not be sufficient in the market to cover up the production of goods and services. Thus, there will not be full employment of resources. There will be an unplanned builtup of inventory in the economy.
Thus, the government must raise its expenditure level if there is a fall aggregate demand in the economy.
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Explain fully the role played by unplanned investment in
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Please fully answer the question in detail: Your textbook uses AD in both the Keynesian model...
Please fully answer the question in detail: Your textbook uses AD in both the Keynesian model and in the AS/AD model. In most other textbooks the authors use AE instead of AD in the Keynesian model. Explain why both AD and AE are equal to C + I + G + NX. Since both are equal to C + I + G + NX, in what ways are they different? Use graphs to illustrate. Will rate answer based on the...
End of Chapter A.3 Consider the macroeconomic model shown below: C = 750 +0.50Y 1 =...
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QUESTION 3: KEYNESIAN MODEL (7 POINTS) (You must show all steps of your calculations to get...
QUESTION 3: KEYNESIAN MODEL (7 POINTS)
(You must show all steps of your calculations to get credit
for each item of this question; otherwise, you will be deducted
marks)
ANSWER THE FOLLOWING QUESTIONS BASED ON THE KEYNESIAN
ECONOMY DESCRIBED IN THE TABLE BELOW. ALL FIGURES ARE IN $
BILLIONS.
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the usual assumptions presented in the Keynesian theory (Chapter
9). All figures are in $ billions.
(1 point) B. Calculate...
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End of Chapter A.3 Consider the macroeconomic model shown below: C = 750 +0.50Y 1 = 2.000 G = 1,500 NX = 100 Y=C+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. (Enter your responses as integers.) Aggregate Expenditures (AE) GDP 4.350 Unplanned Change in Inventories 13.050 Enter your answer in the edit fields and then click Check Answer All parts showing Clear Al Check And
UUUIU. U UW PL 21 of 22 (19 complete) HW Scor End of Chapter A.3 Consider the macroeconomic model shown below: C = 750 + 0.50Y 1 = 2,000 G = 1,500 NX = 100 Y=+I+G+ NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. (Enter your responses as integers.) Aggregate Expenditures (AE) Unplanned Change in Inventories GDP $4,350 $13,050 Enter your answer in the edit fields and then click...
QUESTION 3: KEYNESIAN MODEL (7 POINTS)
(You must show all steps of your calculations to get credit
for each item of this question; otherwise, you will be deducted
marks)
ANSWER THE FOLLOWING QUESTIONS BASED ON THE KEYNESIAN
ECONOMY DESCRIBED IN THE TABLE BELOW. ALL FIGURES ARE IN $
BILLIONS.
(2 points) A. Fill in the blanks in this table, making
the usual assumptions presented in the Keynesian theory (Chapter
9). All figures are in $ billions.
(1 point) B. Calculate...
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