2. Aggregate Expenditure. (12 points) a. (5 pts) Collect the data for real GDP for 2021...

  

Transcribed Image Text:

2. Aggregate Expenditure. (12 points) a. (5 pts) Collect the data for real GDP for 2021 (annual) from the BEA Show the equilibrium level of output on the aggregate expenditure model given this information, and label this point "A." https://www.bea.gov.itable national-gp-and-personal-income Real GDP 2021: b. (0.75 pt) In November, 2021, the $1.2 trillion Infrastructure Investment and Jobs Act passed, with spending on roads, bridges, ports and public transit, clean water, and expanded access to high speed internet. The investment will be made over a 5 year period, and assume that 20%, or $240 billion, is spent each year. Assume all else is held constant, and only look at the effects of this Act. The amounts above are in current US dollars. Now get the GDP deflator (called "Implicit Price Deflator on BEA) for 2022, and calculate the real level of spending for one year of spending for the plan, and fill in the table below. D) Implicit Price Deflator for GDP For 2022 (to 3 decimals) i) Nominal Government Spending. 2022 (in billions, nearest 1 decimal) (0.25 pts) GDP Deflator: 240 Real Government Spending (in billions, to nearest 1 decimal), 2022 ii) ii) c. (4 pts) A recent publication from SPGlobal estimated that the multiplier from the Infrastructure Investment and Jobs Act would be 1.4. Assume that the spending multiplier effect for each year of spending takes 1 year to feel the full effect. Given the information above, calculate: L (1 pt) the change in real GDP (to the nearest 1 decimal) from the 20% spent in 2022. ii. (0.5 pts) Real Government Spending: iii. (1 pt) Real GDP in 2023. (2 pts) Show this new equilibrium in your graph above in part (a), and label this point "B." d. (2.25 pts) (1.25) If the multiplier is 1.4, calculate the marginal propensity to consume (mps). (1) Does this estimate for the marginal propensity to consume follow the Keynesian model, the Permanent Income Hypothesis, or somewhere in between? Explain. 2. Aggregate Expenditure. (12 points) a. (5 pts) Collect the data for real GDP for 2021 (annual) from the BEA Show the equilibrium level of output on the aggregate expenditure model given this information, and label this point "A." https://www.bea.gov.itable national-gp-and-personal-income Real GDP 2021: b. (0.75 pt) In November, 2021, the $1.2 trillion Infrastructure Investment and Jobs Act passed, with spending on roads, bridges, ports and public transit, clean water, and expanded access to high speed internet. The investment will be made over a 5 year period, and assume that 20%, or $240 billion, is spent each year. Assume all else is held constant, and only look at the effects of this Act. The amounts above are in current US dollars. Now get the GDP deflator (called "Implicit Price Deflator on BEA) for 2022, and calculate the real level of spending for one year of spending for the plan, and fill in the table below. D) Implicit Price Deflator for GDP For 2022 (to 3 decimals) i) Nominal Government Spending. 2022 (in billions, nearest 1 decimal) (0.25 pts) GDP Deflator: 240 Real Government Spending (in billions, to nearest 1 decimal), 2022 ii) ii) c. (4 pts) A recent publication from SPGlobal estimated that the multiplier from the Infrastructure Investment and Jobs Act would be 1.4. Assume that the spending multiplier effect for each year of spending takes 1 year to feel the full effect. Given the information above, calculate: L (1 pt) the change in real GDP (to the nearest 1 decimal) from the 20% spent in 2022. ii. (0.5 pts) Real Government Spending: iii. (1 pt) Real GDP in 2023. (2 pts) Show this new equilibrium in your graph above in part (a), and label this point "B." d. (2.25 pts) (1.25) If the multiplier is 1.4, calculate the marginal propensity to consume (mps). (1) Does this estimate for the marginal propensity to consume follow the Keynesian model, the Permanent Income Hypothesis, or somewhere in between? Explain.

Answer rating: 100% (QA)

a Real GDP in 2021 21000 billion Equilibrium point A 21000 21000 b GDP deflato... View the full answer