Total production (tp) and the level of natural real gdp

Reference no: EM13880151

Total production (TP) and the level of natural real GDP (NRGDP) for a hypothetical economy are represented on the graph that follows. When real GDP is $525 billion, consumption is $420 billion, government purchases are $75 billion, and investment is $55 billion. When real GDP is $575 billion, consumption is $445 billion, government purchases are $75 billion, and investment is $55 billion. With this information, use the blue line (circle symbol) to plot the economy's total expenditure function within a simplified Keynesian framework.

See Graph # 1

The economy is in equilibrium when real GDP is ($550 billion, $525 billion, $625 billion, or $575 billion). At this point, the economy is also in (recessionary gap, inflationary gap, or Say's paradox).
Which of the following did Keynes argue would be needed to move the economy to equilibrium at natural real GDP? Check all that apply.

A decrease in consumption A decrease in government purchases An increase in investment An increase in government purchases

436_Chapter 10 Graph Question.jpg

Reference no: EM13880151

Questions Cloud

List the types of tests that can be performed : What kinds of audit tools are used to perform routine tests on electronic data files taken from databases? List the types of tests that can be performed with these tools.

Dividends are expected to grow at constant rate : The Jackson–Timberlake Wardrobe Co. just paid a dividend of $2.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Investors require a return of 14 percent on the company's stock. What ..

How much pollution should be reduced : Currently, the mill has the legal right to pollute. Can the parties come to a mutually beneficial agreement to reduce pollution? If so, how much pollution should be reduced?

Training schools are detention facilities designed to house : Training schools are detention facilities designed to house delinquent youths

Total production (tp) and the level of natural real gdp : Total production (TP) and the level of natural real GDP (NRGDP) for a hypothetical economy are represented on the graph that follows. When real GDP is $525 billion, consumption is $420 billion, government purchases are $75 billion, and investment is ..

Forecasts of revenues over the lifetime of project : These are the forecasts of revenues over the lifetime of a project. Assume all cash flows occur at the end of the year. Yearly expenses from year 1 to year 3: $0 Yearly expenses from year 4 to year 10: $55 Million Yearly expected revenues from year 4..

Calculate the yearly interest income of each bond : Calculate the yearly interest income of each bond on the basis of its coupn rate and the number of bonds that Mark could buy with his $20,000.

Ifrs as applied by af and a typical balance sheet : 1.Air FranceKLM (AF), a French company, prepares its financial statements according to International Financial Reporting Standards.

User Account

All Pages