Calculate the slope and complete the schedule below. Hint words: Linear relationship Income Aggregate Expenditures (C +
Question:
Calculate the slope and complete the schedule below. Hint words: Linear relationship
Income | Aggregate Expenditures (C + I + G) |
$700 | 1450 |
$1700 | 2200 |
$2700 | ------------- |
$3700 | ------------- |
$5700 | 4700 |
$6200 | ------------- |
(a).Draw this graph complete with a 45 degree AP line.
(b) At what level of output (income) will this economy operate? In other words, what point is equilibrium?
(c) Line up this AE/AP graph above an inverted aggregate production graph. Demonstrate with a dotted line that there is a recessionary gap where potential output is $5850.
(d). How much of a gap is there? Show work
(e). What is the MPS? Show work.
(f). What is the Multiplier? Show work.
(g). The government can close this gap in two ways. They can increase government expenditures by $_____________ or they can reduce taxes by $______________. Show all work.
A Survey of Mathematics with Applications
ISBN: 978-0134112107
10th edition
Authors: Allen R. Angel, Christine D. Abbott, Dennis Runde