ought, Spring 2o16 Problem Set 5, 20 points, Due: April 12, 2016 1. (4 points) F

Question

ought, Spring 2o16 Problem Set 5, 20 points, Due: April 12, 2016 1. (4 points) Find the average annual growth rate for Zamboni based on the following data: 2008 2009 2010 2011 2012 2013 2014 2015 3.1% 2.2% 0.5% -1.0% 1.8% 2.4% 2.7% 1.9% 2. (6 points) Use the graph below to answer question 2 Real aggregate expenditure, AE (trillions of 2000 dollars) AE, 45 Real GDP. Y (trillions of 2000 dollars) (2 points) Which point on the graph indicates macroeconomic equilibrium? (I point) What does the difference between 0 and the intercept of the AE line indicate? 3 points) Explain the relationship between planned inventories and actual inventories at Will future production increase or decrease at point J? Point L? points J and

Explanation / Answer

1) 1.7

2) a) It is K

b) Income/output

c) Future production decrease at point J

Future production increase at point L

Planned inventories + depreciation = Actual inventories

3) a) For AE1, equilibrium is at point K

For AE2, equilibrium is at point N

b) There is recession

c) It is the multiplier effect

d) 10 x 1/ 1-0.9

= 10 x 1/ 0.1

= 100

Real GDP increases by 100

By,

Nishant Bhatt

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