Given the following information for the Macro Economy answer the following questions.

In this economy we have an MPC equal to 0.60, Autonomous Consumption of $100 billion, Planned Investment (I) of $1,000 billion, Government Spending (G) of $1,200 billion and Net Taxes (T) of $500 billion.

a) Fill in the missing data in the table below (all the numbers are in billions).

Y	T	Yd	C	S	AE
$2,000	500	1,500	1,000	1,000	3,200
$3,000	500	2,500	1,600	1,400	3,800
$4,000	500	3,500	2,200	1,800	4,400
$5,000	500	4,500	2,800	2,200	5,000
$6,000	500	5,500	3,400	2,600	5,600
$7,000	500	6,500	4,000	3,000	6,200
$8,000	500	7,500	4,600	3,400	6,800
$9,000	500	8,500	5,200	3,800	7,400
$10,000	500	9,500	5,800	4,200	8,000

a) If this economy had a full employment level of income equal to $8,000 billion, what Macroeconomic condition is this economy experiencing. Explain your answer.

b) Using the Spending Multiplier, determine the change in G that is needed to get this economy to be in equilibrium at full employment. Please clearly show your work.

c) Using the Tax Multiplier, determine the change in T that is needed to get this economy to be in equilibrium at full employment. Please clearly show your work.

Answer rating: 100% (QA)

a To determine the Macroeconomic condition of the economy we need to analyze the values of the aggregates The economy is experiencing a surplus in the goods market as the actual output Yd is greater t... View the full answer