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:

Efferent

Referring to nerve fibers that carry impulses away from the central nervous system to effectors (such as muscles or glands).

Afferent

Relating to or denoting nerve fibers that carry sensory information toward the central nervous system.

Central

Being at the most important or core position; of primary importance or relevance.

Sensory

Pertaining to the senses or sensation.