Reference no: EM13137796
1. Calculate AE given the information below and completely fill in the table.
2. Where is equilibrium in this economy based on the table?
3. Using the injections-withdrawals approach complete the table and demonstrate that the point you chose in part 2 is the equilibrium.Go back to Chapter 8 if you forget how this is calculated.
4. Create another table and recalculate AE assuming that consumption has decreased at all levels by $25 (e.g. instead of consumption of 125 when total income is 95, consumption becomes 100).
5. Where is equilibrium in this economy now? (highlight the row)
6. Using the injections-withdrawals approach, complete the table again and demonstrate that the point you chose in question 4 is the equilibrium now.
7. If this economy had exports, explain the impact of the net export effect on fiscal policy, providing an example.
Taxes: $10 at each level of income
Investments: $15
Government Spending: $25
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Total Income
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Taxes
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Disposable Income
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C
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S
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I
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G
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AE
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95
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125
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105
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135
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120
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145
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140
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150
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150
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155
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165
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160
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180
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170
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190
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180
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200
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185
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240
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200
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280
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215
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300
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225
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Injections-Withdrawals Approach
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Item (Name the item here)
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Injections (place the $ amount in this column)
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Withdrawals(place the $ amount in this column)
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Totals
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Total Income
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Taxes
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Disposable Income
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C
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S
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I
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G
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AE
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95
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105
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120
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140
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150
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165
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180
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190
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200
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240
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280
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300
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Injections-Withdrawals Approach
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Item (Name the item here)
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Injections (place the $ amount in this column)
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Withdrawals(place the $ amount in this column)
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Totals
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