For the table shown, answer the following questions:

  1. For the table shown, answer the following questions:
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 $)
Future output tendency
350 200 60 90 60
400 220
450 240
500 260
550 280
  1. What is the marginal propensity to consume for households in this economy?
  2. Based on the assumptions of our aggregate expenditure model, fill in the columns for planned investment, government spending, and net exports. What is this type of expenditure called?
  3. For each level of actual aggregate expenditure, calculate unplanned inventory investment.
  4. What is the equilibrium level of aggregate expenditure in this economy? How do you know?
  5. For each level of actual aggregate expenditure, label the future output tendency as “increase,” “decrease,” or “same” based on what you expect to happen to future output. What relationship does this categorization have to your answer in part d?

 

In: Economics

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