In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, planned

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In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, planned investment spending is $350 billion, and the marginal propensity to consume is ²/₃.

a. Plot the aggregate consumption function and planned aggregate spending.

b. What is unplanned inventory investment when real GDP equals $600 billion?

c. What is Y*, income–expenditure equilibrium GDP?

d. What is the value of the multiplier?

e. If planned investment spending rises to $450 billion, what will be the new Y*?

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Macroeconomics

ISBN: 978-1319120054

3rd Canadian edition

Authors: Paul Krugman, Robin Wells, Iris Au, Jack Parkinson

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Question Posted: Dec 03, 2018 07:21 AM

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In an economy with no government and no foreign sectors, autonomous consumer spending is $250 billion, planned

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a If autonomous consumer spending is 250 billion and the marginal propensity to consume is 2 3 the a...View the full answer

Macroeconomics

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