(a)Answer the followingquestionsusing theaggregateexpendituresmodeloftheeconomydescribed below.

C=...

Question

(a)Answer the followingquestionsusing theaggregateexpendituresmodeloftheeconomydescribed below.

C= 80+ .6YdT=40+ .2Y Ia=28
Ga= 64
Xa=76
M= .18Y

i.Whatare themarginal propensity to consume, the marginal tax rate, and the marginalpropensityto import?

ii.What is thesaving function?What is the marginal propensity to save?

iii.What is theaggregate expenditure function?Whatisautonomousexpenditure?Whatisthe marginal propensity to withdraw?

iv.What is the equilibrium level of real GDP?

v.Whatisthesizeofthemultiplier?

vi.Suppose thefull employment level of real GDP is $340.Does a recessionary gap oran inflationary gapexist?Howcanthegovernment eliminate the gap by alteringgovernment expenditures?

David · Accepted Answer

(a) 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 
i. What are the marginal propensity to consume, the marginal tax rate, and the marginal 
propensity to import? 
Answer: 
Marginal propensity to consume = dC/dYd = 0.6 
Marginal tax rate = dT/dY = 0.2 
Marginal propensity to import = dM/dY = 0.18 
ii. What is the saving function?

(a) Answer the followingquestionsusing theaggregateexpendituresmodeloftheeconomydescribed below. C= 80+ .6Y dT=40+ .2Y I a=28 G a = 64 X a =76 M= .18Y i. Whatare themarginal propensity to consume, the...

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