Answer to Question #77246 in Macroeconomics for walhan
In an economy with no exports and imports, autonomous consumption is $3 trillion, the marginal propensity to consume
is 0.6, investment is $5 trillion, and government expenditure on goods and services is $6 trillion. Taxes are $5 trillion and
do not vary with real GDP.
If real GDP is $34.4 trillion, calculate disposable income, consumption expenditure, and aggregate planned expenditure. What is equilibrium expenditure?
Consumption expenditure C = Ca + c*Yd = 3 + 0.6*29.4 = $20.64 trillion.
Aggregate planned expenditure equals real GDP, so it is $34.4 trillion.
Equilibrium expenditure AE = C + I + G = 20.64 + 5 + 6 = $31.64 trillion.
Need a fast expert's response?Submit order
and get a quick answer at the best price
for any assignment or question with DETAILED EXPLANATIONS!