Working with the Aggregate Consumption Function Complete the following questions. 1. Assume there are four individuals in the macroeconomy. Answer the following questions Current Disposable Income Consumer Spending, Cara Consumer Consumer Consumer Spending, Fred Spending, Don Spending, Robin $0 $1,050 $1,350 $1,580 $2,100 1,000 1,200 1,500 1,800 2,400 1,500 2,000 2,500 a. Complete the table: Add the consumer spending for the remaining levels of disposable income for each individual (hint: you need to find the MPC for each, recall that c = a + MPC *YD) b. Using the data after completing the table, compute the aggregate consumption function.
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- Suppose you have the following disposable income and consumption data for a country, as shown in the table below Disposable income and Consumption BENp e e (dllar 13,000 227,000 3,400 E4,300 1,000 AUsing the information in the table, graph the consumption schedule for this country Instructions Use the tool provided C' to plot the consumption line polnt by point points total. Use the tool Equnibrium to indicate where consumption equals disposable income. Consumption Schedule Conumption (dollarn) 21.000 lave 27000 26000 25000 24.000 23,000 22,000 21000 20,000 20,000 22000 26.000 24.000 28,000 Disposable income (dollars) &What is the stope of the consumpton schedule? Instructions Round your answer to 1 decimal placeQUESTION TWOSuppose that the economy of Mwaliteta Republic has the following data for some economic variables. Assume that Mwaliteta Republic has a population of 500,000 people.Variable Amount in million ZMWExpenditure on Non-durable goods 98Non-residential fixed investment 79Central government expenditure 60Local government expenditure 82Expenditure on durable goods 82Expenditure on services 99Export expenditure 60Inventory Investment 5Depreciation 4Property income from abroad 12Indirect taxes 12Residential fixed investment 42Personal income tax…EV Text Predictions: On The table below shows some of the expenditure amounts in the economy of Arkinia. The MPC, the MTR, and the MPM are all constant, as are the values of the three injections. a. Complete the table below. W 8 ZIN 200 SAN 400 500 GOO Aggregate expenditures ($billions) 700 HANS 800 600 HOD 200 T GO 1541 100 Accessibility: Investigate YD GB 200 460 620 C 400 130 195 Income (Sbillions) 325 The Economy of Arkinia 455 600 Search 5 800 -3 10 40 100 Tools MAL I se A SB 50 Se 58 50 30 50 Sa Draw a 45° line (labelled Y) and the aggregate expenditure function, labelled AE1. Identify expenditure equilibrium with the letter et. Use the tool "et" to show the expenditure equilibrium. Plot only the endpoints of Y and AE. Once all points have been plotted, click on the line (not individual points) and a tool icon will pop up. You can use this to enter exact co-ordinates for your points as needed. G 180 AE₁ IMO 180 THIN 13 180 186 tac taid X 50 sa SAMSUNG 50 10 50 50 54 549 50 IM 40…
- Given the macro economic data below, draw a graph to illustrate if there is arecessionary gap in the given economy.Real GDP $1000BConsumption (100K is Autonomous) $600BInvestment $100BGovernment Spending $200BExport $50BImport $50BMarginal Propensity to Consume 0.50 AD (Expenditure) 45 degree AD = AS $ 1000B AS (Real GDP) a. Calculate the size of the recessionary gap in the economy. b. What would happen to the recessionary gap if the government cut incometaxes by $50B? c. What would happen to the recessionary gap if the Fed increased discountrates? Explain your answer.CThe following equations describe an economy C = 100 + 0.75 Y. I = 50 – 25i where C' is aggregate consumption , Y is disposable income, I is aggre gate investment, Tis taxes, G is go vernment purchases and i is the int erest rate. Derive the IS curve for th T= G= 50 e economy.The following table provides data for an economy in a certa e Consumpticn expenditure Tmports 1000 600 Government 700 purchases of goods and services Construction 500 of new homes and aparchenta Sales of 600 existing homen and apertmenta Exporta 500 Government 200 payments to retirees Household purchases of durable goods Change in inventory 300 100 A Calculate the value of investment spending B. What is the value of government spending C. What is the value of consumer spending D. What is the value of net exports spending E Calculate the value of GDP according to the spending approach
- Click on the icon to read the news clip, then complete the following steps. Business inventories fall when real GDP rises because 1800- 1600- Aggregate expenditure (billions of 2002 dollars) ○ A. inventories are falling from above target to their target levels 1400- B. firms put more production time into producing consumption goods and services OC. firms put more production time into producing exports 1200- OD. both B and C are correct 1000- The graph shows the aggregate planned expenditure curve. Draw a new AE curve to show the effect of an increase in exports and business investment. Label it AE₁. 8004 800 1000 1200 1400 45 degree line G AE 1600 1800 Draw a point at the new equilibrium expenditure. Draw an arrow along the new AE curve to show the effect of the increase in real GDP on consumption expenditure. Real GDP (billions of 2002 dollars) >>> Draw only the objects specified in the question. - News clip Business Inventories Decline, GDP Rises Real gross domestic product (GDP)…Summarize and illustrate the aggregatedemand curve andthe factors that shift itWhat is the relative importance of investment spending (I) in aggreagte demand and some factors that affect it?
- 11:04 AM ECON 122 CAT ONE.docX Phoenix Files QUESTION ONE Is it desirable for a country to have a large gross domestic product? Explain (2 marks) QUESTION TWO You are given data on the following variables in an economy Government spending 300 Planned investment Net exports Autonomous taxes Income tax rate Marginal propensity to consume 0.5 a) Consumption (C) is 600 when income (Y) is equal to 1500. Solve for autonom ous consumption (2 ma rks) ii) 200 S 50 b) Solve for the equilibrium level of output in the following two scenarios: i) There is an income tax t=0.1, Edit 0.1 250 Q Search © | 46| 472 [ 66 c) In the economy with an income tax of 10%, what is the budget balance of the government? (2 marks) O X: × There is no income tax in the economy. Denote these two variables by Yw and YN respectively. (4 marks) d) Solve for the change in net exports that would bring the equilibrium output lev el in the economy with the income tax to the level of YN that you found in part b. specify both…Assume in a simple economy that thc level of saving is -500 when aggregate ourput equals zero and that the margina! propensity to save is 0.2. Derive the saving function and the consumption function, and draw a graph showing these func- tions. At what level of aggregate ouiput does the consumption curve cruss the 45° line? Explain your answer and show this un the graph.Inventories typically increase starting at the beginningof recessions, and begin to decline near the end ofrecessions. What does this say about the relationshipbetween planned spending and aggregate output overthe business cycle?