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

question 7

Essay

Answer the following questions using the aggregate expenditures model of the economy described below.
C = 90 + .7Y_d
T = 50 + .2Y
I_a = 36
G_a = 45
X_a = 62
M = .16Y
(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 $350.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:

Construction In Progress

An account representing the costs associated with constructing long-term, fixed assets that are not yet completed and ready for use.

Costs Incurred

Represents the expenses that a company or individual has realized in the process of conducting business or carrying out a specific activity.

Obligations

Financial or legal responsibilities, such as debts or contractual agreements, that an entity is required to fulfill.

Deposit Method

An accounting method used for recognizing revenue and expenses related to long-term contracts where the earnings process is incomplete.