3. Consider the aggregate expenditure equation AE = 2,000 - 1,000+ 0.7 Y, where the letters represent the usual economic variables. Which of the following is correct? 1. (2,000 - 1,000r) constitute the autonomous components of aggregate expenditure. 2. The sign of the coefficient on the interest rate ris wrong, because aggregate expenditure rises with the interest rate. 3. The equation indicates that a change in the interest rate r shifts the aggregate expenditure line in the Keynesian Cross diagram.
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- Aggregate planned expenditure (trillions of 2009 dollars) 7 1 45° line AE2 AEO 2a) b) plan in th B A AE1 3a) 15 3 4 14 0 14 15 16 17 18 19 Real GDP (trillions of 2009 dollars) In the above figure the economy is initially at point A on the aggregate expenditure curve AEQ. Suppose investment decreases. As a result the AE curve shifts upward to a curve such as AE2. the AE curve shifts downward to a curve such as AE1. O there is a movement along AEO to a point such as B. O there is a movement along AEO to a point such as C. 5 6 7 81 90 100 109 b) T c) T d) It e) $11.1Definition of GDP and explanation of why this is equal to national income (an explanation of how expenditure apptoach and income approach to GDP are related) 1.2 List the most recent quarterly values for consumption, investment, government purchases, and net exports, from table 1.1.5. show that these values are equal to the most recent quarterly GDP value in table 1.1.5 in a calculation. example ($5+$10+$24=$39) "Be clear what quartely values you use in your calculations"The table below gives some of the items in the U.S. National Income and ProductAccounts in 1995.ItemAmount(trillions ofdollars)Consumption expenditure 4.97Investment 1.14Government expenditures 1.37Net exports 0.08Wages 4.20Interest, rent, and profit 1.68Depreciation 0.89a) Use the expenditure approach to calculate U.S. GDP in 1995.b) Use the income approach to calculate U.S. net domestic product at factor cost in
- Consumption expenditure (trillons of 2012 dollars) 25 45° line 20 15 Consumption funccion 10 E ua n e 10 15 20 Disporable income (crillions of 2012 dollars) 14Suppose that an economy consists of only two individuals. Jeremy has $1050 available to spend on goods. He decides to purchase $710 worth of produce from Michele in the current quarter. No other economic activity takes place during the current quarter. Using this information, answer the questions. For the current quarter, what is the economy's income? For the current quarter, what is the economy's expenditure? 8:53 PM 10/13/2020 9. F9 F12 PrtScr Insert Delete F11 F6 L EZ '/ F8 F10 15 %24 %2413. Which of the following is not included in investment expenditure? a) changes in business inventories b) the purchase of a new factory c) the purchase of a new home d) the purchase of common stock 16. Suppose that net national product in 2018 was $50 billion and depreciation was $15 billion. Gross national product in 2018 was: a) $35 billion b) -$35 billion c) $65 billion d) $55 billion
- 1. Which pair of percentages most accurately represents aggregate expenditure components of GDP during the last decade? The numbers below represent average percentages for each variable. Select one: a. C = 68% G = 5% b. C = 30% G = 20% c. C = 68% X-M = -4% d. C = 47% I = 16% %3D %3D 2. You are provided with the following information pertaining to the price index for bread. CY equals current year. BY equals base year. Year Price CY Price BY Price Index 2011 $2.50 $2.50 100 2012 $2.80 $2.50 112 2013 $3.00 $2.50 120 Identify the accurate statement or statements below; Select one: a. the price level increased 12% between 2011 and 2012 b.the price level increased 8% between 2012 and 2013 c. the price level increased 7.14% between 2012 and 2013 d. a. and b. above e. a. and c. above19. Which of the following is included in both the U.S. GDP and GNP? a) the value of all cars produced by Ford in Mexico b) the value of all cars produced by General Motors in the U.S. c) the value of all cars produced by Toyota in the U.S. d) the value of cars produced by Nissan in Japan and the U.S. 20. If personal income is $645 billion, indirect taxes are $20 billion, and subsidies are $15 billion, then net national product is: a) $167 billion. b) $645 billion. c) $650 billion d) $685 billionAn equation for Aggregate Expenditure is: AE = $3600+ 0.8Y, In equilibrium, Income 'Y' = Aggregate Expenditure 'AE'! Solve for Y. Y= $2000
- Gross Domestic Product Explain how net exports affect the US economy. Describe both positive and negative impacts on GDP. Why do national income accountants use net exports to compute GDP, rather than simply adding exports to the other expenditure components of GDP? You have the following information on 3 countries: Soccerland, Handeggland, and Neverland How long will it take until Soccerland’s GDP increases by 75%? How long will it take until Soccerland and Handeggland have the same GDP? Soccerland’s population is not happy that, eventually, Handeggland is going to have higher GDP than their country. They feel that they are a much better country, so they are going to work harder to ensure that Handeggland will never catch up with Soccerland. If Soccerland’s new growth rate is constant every year, what is the minimum growth rate that ensures that Soccerland will always have a higher GDP than Handeggland? Neverland’s ambition is to host the World Cup. At the…Aggregate Expenditure (dollars) 1,000 800 700 600 400 Oc 200 0 ΔΑΕ 45° OB. 600-700 billion dollars. 0 200 400 600 700 800 1,000 Real GDP (billions of constant dollars) In the above figure, an increase in aggregate expenditure is shown as an increase from 400-700 billion dollars. OA 700-800 billion dollars. Potential GDP OD 800-1000 billion dollars. AY AE, AESuppose that an economy consists of only two individuals. Trevor has $1310 available to spend on goods. He decides to purchase $130 worth of produce from Krista in the current year. No other economic activity takes place during the current year. Using this information, answer the questions. For the current year, what is the economy's income? For the current year, what is the economy's expenditure? In an economy, how are income and expenditure related? O Income is greater than expenditure 24 MacBook Air In an economy, how are income and expenditure related? Income is greater than expenditure. O They are equal. Income is less than expenditure. They are unrelated.