MINDTAP Amanda Ry Aplia Homework: Demand-Side Equilibrium: Unemployment or infla
ID: 1127547 • Letter: M
Question
MINDTAP Amanda Ry Aplia Homework: Demand-Side Equilibrium: Unemployment or inflation? Keep the Highest: 35/5 tempts as t. Aggregate expenditure and The following table shows consumption(C), Investment (t, govermment purchases (G), and net exports (-IM) in a hypothetical ecenomy for vanous levels of real GoP (V). Assume that the price level remains unchanged at all levels of income All figures are in bilions of dallars Compute total expentre for each income level and f se the lest column in the lowing table YC-IM Tetal Expenditure 500 300 50 200 100 00 35 150 200 00 00 400 50 200 100 00 450 150 200 300 K… 150 200-100 .za The follewing graph shows income on the hericontal axis and toal epeure (TE)onthe vertical axis The orange line epresents a 45-degree YTE) ine Use the biue points (orcle syl) to pioe the oral expendue nr this economy. Line segments wiautomucically connect the paints B.Explanation / Answer
The marginal propensity to consume for this economy is 0.5
because MPC = change in consumption / change in income
MPC = 50/100 = 0.5
the value of mutliplier = 2
becuase multiplier = 1/ 1-MPC
mutliplier = 1/1-0.5 = 1/0.5 = 2
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