The table represents an income-expenditure table. Fill in the missing numbers and then identify the equilibrium...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The table represents an income-expenditure table. Fill in the missing numbers and then identify the equilibrium levels of GDP and planned aggregate spending. Real GDP (in billions) $0 $1,000 $3,500 $4,000 Consumption (in billions) $800 $1,400 $2,600 -$400 $200 Planned investment spending (in billions) $600 $200 $400 $900 $1,000 Answer Bank $2,000 $3,600 $2,300 Planned aggregate spending (in billions) $400 $400 $2,000 $3,200 $300 $1,200 -$200 Unplanned inventory investment (in billions) $0 00 What is the equilibrium level of GDP? equilibrium GDP: What is the equilibrium level of planned aggregate spending? equilibrium planned aggregate spending: billion dollars billion dollars The accompanying graph represents the market for loanable funds in the hypothetical country of Bunko. Assume the market is initially in equilibrium and inflation expectations are 2%. a. Adjust the supply and/or demand curves to demonstrate the effects of inflation expectations increasing from 2% to 4%. b. What is the real interest rate after the change in inflation expectations? 5% 3% 7% 2% c. Which effect below characterizes the relationship between inflation expectations and nominal interest rates? The Inflation effect The Pigou effect The Fisher effect The Leontief Paradox Interest rate (%) 10 9 8 7 3 2 1 0 0 2 Market for Loanable Funds S D 4 6 8 10 12 14 16 Quantity of loanable funds (billions of $) 18 20 The accompanying table shows disposable income (DI), consumption (C), and savings (S) data for the country of Cornucopia. Disposable income, consumption, and savings are all measured in dollars. Use the numbers provided to complete the table. Disposable income 11000.00 17000.00 19000.00 Consumption Marginal propensity to consume (MPC) 7850.00 Savings 3850.00 4550.00 Marginal propensity to save (MPS) 0.350 Average propensity to consume (APC) 0.704 0.691 Average propensity to save (APS) 0.286 0.303 0.313 10450.00 0.309 Answer Bank 13050.00 0.296 3150.00 5250.00 13000.00 0.650 11750.00 0.714 5950.00 0.687 9150.00 0.697 15000.00 Income and consumption changes for five people are shown in the table. Given this information, rank the marginal propensities to consume (MPC) for the five people from largest to smallest. Arnold Bob Largest MPC Smallest MPC Earl Answer Bank Carter Derek Name Income change Consumption change Arnold +$20,000 Bob +$10,000 Carter +$4,000 Derek -$10,000 Earl -$20,000 +$12,000 +$3,200 +$3,200 -$7,000 -$8,000 The table represents an income-expenditure table. Fill in the missing numbers and then identify the equilibrium levels of GDP and planned aggregate spending. Real GDP (in billions) $0 $1,000 $3,500 $4,000 Consumption (in billions) $800 $1,400 $2,600 -$400 $200 Planned investment spending (in billions) $600 $200 $400 $900 $1,000 Answer Bank $2,000 $3,600 $2,300 Planned aggregate spending (in billions) $400 $400 $2,000 $3,200 $300 $1,200 -$200 Unplanned inventory investment (in billions) $0 00 What is the equilibrium level of GDP? equilibrium GDP: What is the equilibrium level of planned aggregate spending? equilibrium planned aggregate spending: billion dollars billion dollars The accompanying graph represents the market for loanable funds in the hypothetical country of Bunko. Assume the market is initially in equilibrium and inflation expectations are 2%. a. Adjust the supply and/or demand curves to demonstrate the effects of inflation expectations increasing from 2% to 4%. b. What is the real interest rate after the change in inflation expectations? 5% 3% 7% 2% c. Which effect below characterizes the relationship between inflation expectations and nominal interest rates? The Inflation effect The Pigou effect The Fisher effect The Leontief Paradox Interest rate (%) 10 9 8 7 3 2 1 0 0 2 Market for Loanable Funds S D 4 6 8 10 12 14 16 Quantity of loanable funds (billions of $) 18 20 The accompanying table shows disposable income (DI), consumption (C), and savings (S) data for the country of Cornucopia. Disposable income, consumption, and savings are all measured in dollars. Use the numbers provided to complete the table. Disposable income 11000.00 17000.00 19000.00 Consumption Marginal propensity to consume (MPC) 7850.00 Savings 3850.00 4550.00 Marginal propensity to save (MPS) 0.350 Average propensity to consume (APC) 0.704 0.691 Average propensity to save (APS) 0.286 0.303 0.313 10450.00 0.309 Answer Bank 13050.00 0.296 3150.00 5250.00 13000.00 0.650 11750.00 0.714 5950.00 0.687 9150.00 0.697 15000.00 Income and consumption changes for five people are shown in the table. Given this information, rank the marginal propensities to consume (MPC) for the five people from largest to smallest. Arnold Bob Largest MPC Smallest MPC Earl Answer Bank Carter Derek Name Income change Consumption change Arnold +$20,000 Bob +$10,000 Carter +$4,000 Derek -$10,000 Earl -$20,000 +$12,000 +$3,200 +$3,200 -$7,000 -$8,000
Expert Answer:
Related Book For
Posted Date:
Students also viewed these economics questions
-
Annuity A and B has the same present value. Suppose the required rate of return is 7.5% per year. Annuity A pays $5,000 at the first day of every year for twenty years while the payment of Annuity B...
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
Congratulations! Your portfolio returned 11% last year, 2% better than the market return of 9%. Your portfolio had a standard deviation of earnings equal to 18%, and the risk-free rate is equal to...
-
Uhura Resort opened for business on June 1 with eight air-conditioned units. Its trial balance on August 31 is as follows (in thousands). Other data: 1. The balance in prepaid insurance is a 1-year...
-
Find a system that was developed by using Visual Studio .NET (Visual Basic or C#). If possible, find one that has an Internet user interface and a network-based user interface. Is it multi-layered?...
-
How would the primordial helium content of the universe have been affected if the present cosmic background radiation temperature was \(27 \mathrm{~K}\) instead of \(2.7 \mathrm{~K}\) ? What about...
-
On the first day of its fiscal year, Woodard Company issued $12,000,000 of 10-year, 8% bonds to finance its operations of producing and selling home improvement products. Interest is payable...
-
2 1. Let I = S 1 + exc - - ex -dx. 1+ ex 0
-
At Vision Club Company, office workers are employed for a 40-hour workweek on either an annual or a monthly salary basis. Given on the form below are the current annual and monthly salary rates for...
-
Why does it matter who makes the media messages we consume? That is, how might the social identities of the producers of media messages impact the types of messages that get produced?
-
In what instances could a business plan be used?
-
How does a business plan encourage disciplined strategic thinking?
-
To which type of healthcare company would the acid test ratio likely be more applicable than the current ratio? Why?
-
Can an organization gain and sustain competitive advantage by having cutting-edge technology? What problems are inherent in this approach?
-
How are strategic plans and business plans similar?
-
For each value entered from the keypad in the figure, design the circuit that produces that many volts (for example, 9 volts will be produced when 9 is pressed). 1 2 KVA 4 * 5 6 8 3 ARDEERD 9 #...
-
Which of the following gives the range of y = 4 - 2 -x ? (A) (- , ) (B) (- , 4) (C) [- 4, ) (D) (- , 4] (E) All reals
-
What happens to national saving when the government runs a budget surplus? What is the twin deficits idea? Did it hold for the United States in the 1990s? Briefly explain.
-
What is economic efficiency? How do externalities affect the economic efficiency of a market equilibrium?
-
Suppose that Jill Johnson has to choose between building a smaller restaurant and a larger restaurant. In the graph below, the relationship between costs and output for the smaller restaurant is...
-
Discuss how the term market failure is understood in the context of public financial management.
-
Compare and contrast positive and negative externalities.
-
Compare and contrast the responsibilities of the auditor general and public protector in South Africa.
Study smarter with the SolutionInn App