Economics Expenditure Multiplier
Essay by Mohd Mohd • June 22, 2019 • Course Note • 342 Words (2 Pages) • 738 Views
Chapter (4) –
Exercise: Consider the following table
National income (Y) | Consumption (C) | Investment (I) | Government spending (G) | Aggregate expenditure (AE) | ||
0 | 120 | 15 | 25 | |||
100 | 180 | |||||
200 | 240 | |||||
300 | 300 | |||||
400 | 360 | |||||
500 | 420 | |||||
600 | 480 | |||||
700 | 540 | |||||
800 | 600 |
1 | The value of autonomous consumption is | |
2 | The value of autonomous investment is | |
3 | The value of autonomous government spending is | |
4 | The value of autonomous expenditure is | |
5 | The value of MPC | |
6 | The value of MPS | |
7 | Consumption function is | |
8 | Saving function is | |
9 | The value of equilibrium consumption is | |
10 | The value of equilibrium expenditure is | |
11 | The size of multiplier is | |
12 | What is the value of unplanned inventory when national income (y) = 700 | |
13 | Find new equilibrium expenditure when autonomous expenditure increase by $20 | |
14 | Find new equilibrium expenditure when autonomous expenditure decrease by $20 | |
15 | Draw AE curve, label your graph, show the equilibrium expenditure |
Chapter (4) –
Exercise: Answers
National income (Y) | Consumption (C) | Investment (I) | Government spending (G) | Aggregate expenditure (AE) | Unplanned inventory UI | The country should |
0 | 120 | 15 | 25 | 160 | -160 | Increase GDP |
100 | 180 | 15 | 25 | 220 | -120 | Increase GDP |
200 | 240 | 15 | 25 | 280 | -80 | Increase GDP |
300 | 300 | 15 | 25 | 340 | -40 | Increase GDP |
400 | 360 | 15 | 25 | 400 | 0 | No change |
500 | 420 | 15 | 25 | 460 | 40 | Decrease GDP |
600 | 480 | 15 | 25 | 520 | 80 | Decrease GDP |
700 | 540 | 15 | 25 | 580 | 120 | Decrease GDP |
800 | 600 | 15 | 25 | 640 | 160 | Decrease GDP |
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