Answer the Following Questions Using the Aggregate Expenditures Model of the Economy

question 44

Essay

Answer the following questions using the aggregate expenditures model of the economy described below.C = 80 + .6Yd
T = 40 + .2Y
Ia = 28
Ga = 64
Xa = 76
M = .18Y
(a) What are the marginal propensity to consume, the marginal tax rate, and the marginal propensity to import?
(b) What is the saving function? What is the marginal propensity to save?
(c) What is the aggregate expenditure function? What is autonomous expenditure? What is the marginal propensity to withdraw?
(d) What is the equilibrium level of real GDP?
(e) What is the size of the multiplier?
(f) Suppose the full employment level of real GDP is $340.Does a recessionary gap or an inflationary gap exist? How can the government eliminate the gap by altering government expenditures?

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Definitions:

Mid-Eighteenth Century

A period referring to the middle of the 18th century, around the 1750s, known for Enlightenment ideas, colonial expansion, and early industrial developments.

Slavery

A system where individuals are owned by others, deprived of personal freedom and forced to perform labor or services against their will.

Eighteenth Century

A period from 1701 to 1800 that is marked by significant historical events including the Enlightenment and the American Revolution.

Artisan Shops

Small-scale businesses specializing in handmade or traditional products, often emphasizing quality and craft.