Calculate the income-expenditure equilibrium level GDP

Assignment Help Business Economics

Reference no: EM13978510

Suppose an imaginary economy is represented by the following equations:

GDP= C + I

C= $100 + 0.8 Y D

I = I Planned + I Unplanned

Iplanned = $200

AEplanned = C+IPlanned

(1) Calculate the income- expenditure equilibrium level GDP. Show your work.

(2) Suppose the level of planned investment spending (Iplanned) drops by $50 . What will the new equilibrium GDP be? Show your work

(3) With Iplanned back at the original level $200, suppose that autonomous consumption spending decreases from $100 to $60. What will the new equilibrium be? Show your work.

(4) Calculate the value of the multiplier.

Reference no: EM13978510

Questions Cloud

What kind of returns to scale is the firm experiencing : A.B. Denson Company had been employing 6 workers and 8 tons of raw materials, using 2,000 square feet of plant space. The firm increased its work force to 12 workers utilizing 16 tons of raw materials in a plant space increased to 4,000 square feet. ..

Playing a one-stage guessing game : Alice and Barbara are playing a one-stage guessing game. Each must choose a number between 1 and 8 (inclusive). Alice’s target is to match Barbara’s number. Barbara’s target is to name twice Alice’s number. Each receives $10 minus a dollar penalty th..

Discuss the major agenda items of this year : Discuss the overall purpose of the G 20 summit. Do you believe there is a need for the U.S. to continue to participate in the summit? Why or why not. In addition, discuss the major agenda items of this year’s G20 summit. What impact do you believe th..

Consider a typical short-run AS and AD model : Consider a typical short-run AS/AD model which consists of AD and SRAS curves. In each of the following cases, in the short run, determine whether the events cause a shift of a curve or a movement along a curve. Determine which curve is involved and ..

Calculate the income-expenditure equilibrium level GDP : Suppose an imaginary economy is represented by the following equations: Calculate the income- expenditure equilibrium level GDP. Suppose the level of planned investment spending (Iplanned) drops by $50 . What will the new equilibrium GDP be?

Exports of goods and services other than automobiles : For a number of years, Japan automakers voluntarily limited the number of cars they exported to the United States. What effect do you think this had on Japanese imports of U.S cars and U.S exports of goods and services other than automobiles?

Create an ecommerce business model : Create an ecommerce business model for an online fresh seafood business (Dina's Fresh Seafood) using the 8 key elements of a Business Model also include a business overview and a conclusion

How will this data help you to do your research : How will this data help you to do your research? (Explain in some detail)

Globalisation having engendered eased the rise of obesity : Globalisation having engendered/eased the rise of obesity, what is the appropriate answer ?

User Account

All Pages