Question

Income (Yd) |
Consumption Expenditure |
Saving |
Investment Expenditure |
Government Expenditure |
Net Export Expenditure |
Aggregate Expenditure |

$8000 |
$11,000 |
$2,500 |
$5,000 |
$12,500 |
||

12,000 |
14,000 |
2,500 |
5,000 |
12,500 |
||

20,000 |
20,000 |
2,500 |
5,000 |
12,500 |
||

30,000 |
27,500 |
2,500 |
5,000 |
12,500 |
||

50,000 |
42,500 |
2,500 |
5,000 |
12,500 |
||

100,000 |
80,000 |
2,500 |
5,000 |
12,500 |

Calculate savings, MPC, MPS, break even income, and the equilibrium level of income (Y = AE = C + I + G +NX) in the above given information.

Draw a graph showing disposable income (Yd) on the horizontal axis and aggregate expenditures (AE) on the vertical axis with a 45 degree line. Graph consumption curve (CC) and AE (AE = C + I + G + NX) curve on this graph. Indicate equilibrium level of income on this graph.

PLEASE AVOID HANDWRITING!

Answer #1

Yd | C | S | I | G | NX | AE |

8000 | 11000 | -3000 | 2500 | 5000 | 12500 | 31000 |

12000 | 14000 | -2000 | 2500 | 5000 | 12500 | 34000 |

20000 | 20000 | 0 | 2500 | 5000 | 12500 | 40000 |

30000 | 27500 | 2500 | 2500 | 5000 | 12500 | 47500 |

50000 | 42500 | 7500 | 2500 | 5000 | 12500 | 62500 |

100000 | 80000 | 20000 | 2500 | 5000 | 12500 | 100000 |

C + S = Yd

MPC = Change in consumption/Change in Yd = (14000 - 11000)/(12000 - 8000) = 0.75

MPS = 1 - MPC = 0.25

Break even income = 100000 (where AE = Yd)

Income
(Yd)
Consumption
Expenditure
Saving
Investment
Expenditure
Government
Expenditure
Net Export
Expenditure
Aggregate
Expenditure
$8000
$11,000
$2,500
$5,000
$12,500
12,000
14,000
2,500
5,000
12,500
20,000
20,000
2,500
5,000
12,500
30,000
27,500
2,500
5,000
12,500
50,000
42,500
2,500
5,000
12,500
100,000
80,000
2,500
5,000
12,500
1.Calculate savings, autonomous consumption, MPC, MPS, break
even income, and the equilibrium level of income (Y = AE = C + I +
G + NX) in the above given information.
2. Draw a graph...

This assignment is due by Monday, October 12 by
11:59pm.
Income
(Yd)
Consumption
Expenditure
(C)
Saving
(S)
Investment
Expenditure
(I)
Government
Expenditure
(G)
Net Export
Expenditure
(NX)
Aggregate
Expenditure
(AE)
$8000
$11,000
$2,500
$5,000
$12,500
12,000
14,000
2,500
5,000
12,500
20,000
20,000
2,500
5,000
12,500
30,000
27,500
2,500
5,000
12,500
50,000
42,500
2,500
5,000
12,500
100,000
80,000
2,500
5,000
12,500
From the above given information calculate savings, MPC, MPS,
Multiplier, and the equilibrium level of income (Y = AE...

Let AE = C +I +G+NX where AE is the aggregate expenditure, C is
the consumption function, I is investment, G is government
expenditure and NX is the net export.
Given C = 100+0.65Y where Y is the national income and I = 100,
G = 100+0.10Y, NX = 0
(a) Graph the consumption function with Y on the horizontal axis
and C on the vertical axis.
(b) Graph the aggregate expenditure function with Y on the
horizontal axis and...

4. Suppose that consumption C is the following function of
disposable income YD C = 200 + 0:8YD (a) What are the marginal
propensities to consume and save (MPC and MPS)? (b) Graph the
consumption function and the 45 degree line. (c) Solve for saving
or dissaving at levels of disposable income 300, 900, and 1300. (d)
Find the level of disposable income where savings equals zero.

Suppose the following aggregate expenditure model describes the
US economy:
C = 1 + (8/9)Yd T = (1/4)Y I = 2 G = 4 X = 3 IM = (1/3)Y where C
is consumption, Yd is disposable income, T is taxes, Y is national
income, I is investment, G is government spending, X is exports,
and IM is imports, all in trillions $US.
(a) Derive a numerical expression for aggregate expenditure (AE)
as a function of Y. Calculate the equilibrium...

C = 50 + 0.80Yd; C = consumption function; Yd = disposable
income (Y-T)
T = 30; T = Tax revenue I = 100;
I = Investment G = 150;
G = Government expenditure
Yf = Full Employment RGDP (Potential RGDP) = 1600
14. Using the value of MPC = 0.75, and knowing the difference
between the values of expenditure multiplier and the tax
multiplier, with reduction of taxes by $300 billion (other things
staying the same), estimate increased level...

Given the information below, complete the chart and answer the
questions that follow. Assume there are no taxes, so Y = Yd. Also,
assume that I, G and (X-M) are autonomous expenditures.
S
Y
C
I
G
(X-M)
TE
0
5,000
2,500
2,000
500
10,000
12,500
20,000
30,000
40,000
50,000
What is the MPC?
What is the MPS?
What is the specific consumption function for this
economy?
What is equilibrium income?

Disposable
Income
Yd
Consumption
C
$2,000
$2,040
2,100
2,120
2,200
2,200
2,300
2,280
2,400
2,360
Using the table provided calculate the following for each level
of disposable income:
Change in disposable income
Change in consumption
Saving
Change in saving
MPC
MPS
The multiplier
Show your work if possible. I suggest that you build a
table containing the information requested. This question is worth
7 points. All other questions are worth one point
each.
2. The classical economists believed __________ determined...

1. The consumption function, investment function, government
function, and net export functions are given as follows:
C = 100 + 0.8Yd , I = 200, G = 350, X = 500, IM = 100
+ 0.2Y, T = 10 + 0.05Y
At what levels of national income will government budget be
balanced?
At what levels of national income will trade be balanced?
What is the equation of the aggregate expenditure curve?
Calculate the equilibrium level of national income.
Calculate the...

If autonomous consumption is $1000, the MPC = 0.75, net taxes =
$500, investment spending = $800, and govt purchases = $500, and NX
= $0, what is equilibrium GDP?
Question 1 options:
$1,800
$1,925
$2,566.70
$7,200
$7,700
Question 2 (1 point)
The focus of the short-run macro model is on the role of
Question 2 options:
spending in explaining economic fluctuations
labor in explaining economic fluctuations
financial markets in explaining economic fluctuations
output in explaining economic fluctuations
resources in...

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