Table 1 Table 2 Real GDP Consumption Planned Investment Government Purchases Net Exports $2,000 $1,600 $250...

Transcribed Image Text:

Table 1 Table 2 Real GDP Consumption Planned Investment Government Purchases Net Exports $2,000 $1,600 $250 $250 $100 2,500 2,000 250 250 100 3,000 2,400 250 250 100 3,500 2,800 250 250 100 Real GDP $2,400 2,500 Aggregate Unplanned Change Expenditure in Inventories 3,000 3,500 Real GDP Will... (increase, decrease, or be in equilibrium) Examine the Table 1 information provided and perform the following activities for Table 2: a) For each level of Real GDP, calculate aggregate expenditure, unplanned change in inventories, and indicate what will happen to GDP (increase, decrease or be in equilibrium). Explain how you derived the Aggregate Expenditure and Unplanned Change in Inventories values. (10pts) b) Explain how the values in the Unplanned Change in Inventories column dictate what will happen to the Real GDP. (10pts) Real Aggregate Expenditure, AE (billions of 2007 dollars) Y=AE N AE AE Real GDP, Y (billions of 2007 dollars) c) Suppose the Canadian economy is currently at point K as shown in the diagram above. Explain briefly two events that could cause it to move to point N. (5pts) Table 1 Table 2 Real GDP Consumption Planned Investment Government Purchases Net Exports $2,000 $1,600 $250 $250 $100 2,500 2,000 250 250 100 3,000 2,400 250 250 100 3,500 2,800 250 250 100 Real GDP $2,400 2,500 Aggregate Unplanned Change Expenditure in Inventories 3,000 3,500 Real GDP Will... (increase, decrease, or be in equilibrium) Examine the Table 1 information provided and perform the following activities for Table 2: a) For each level of Real GDP, calculate aggregate expenditure, unplanned change in inventories, and indicate what will happen to GDP (increase, decrease or be in equilibrium). Explain how you derived the Aggregate Expenditure and Unplanned Change in Inventories values. (10pts) b) Explain how the values in the Unplanned Change in Inventories column dictate what will happen to the Real GDP. (10pts) Real Aggregate Expenditure, AE (billions of 2007 dollars) Y=AE N AE AE Real GDP, Y (billions of 2007 dollars) c) Suppose the Canadian economy is currently at point K as shown in the diagram above. Explain briefly two events that could cause it to move to point N. (5pts)