Exercises Ch 19 Work individually and solve the exercises below for the next class. 1) Fill in the missing values in the following table. Assume that the value of the MPC does not change as real GDP changes. a. What is the value of the MPC? b. What is the value of equilibrium real GDP? Planned Aggregate Unplanned Expenditures Change in Inventories AE I National Income Consumption Planned GovernmentNet and Real Investment Purchases Exports GDP C) (NX) $9,000 $7,600 $1,200 $1,200 $400 10.000 8,400 1,200 1.200 -400 11,000 9,200 1,200 1,200 -400 12,000 10,000 1,200 1,200 -400 13.000 10,800 1.200 1,200 -400 2) Suppose a booming economy in Europe causes net exports to rise by US$ 75 billion in Saudi Arabia. If the MPC is 0.8, what will be the change in equilibrlum in GDP? - Would a larger multiplier lead to longer and more severe recessions or shorter and less severe recessions? Why? - Fill the blanks 1) Fill in the blanks in the table in the next column. Assume that taxes are zero: National Income Marginal Propensity Marginal Propensity Consumption Savings and Real to Consume to Save (5) GDP (MPC) KMPS) $9.000 58,000 10,000 8.750 11,000 9.500 12,000 10.250 13,000 11,000 $1.000 $1,250 $1,500 $1.750 $2,000