The above table gives information for the nation of East Hampton
a. Find aggregate planned expenditure for each level of real GDP.
b. What is the MPC?
c. What is the equilibrium level of real GDP?
a. To calculate aggregate expenditure, for each level of real GDP add consumption expenditure plus investment plus government purchases plus exports and then subtract imports. The above table has the answers for each level of real GDP.
b. The MPC equals 0.80, the change in consumption expenditure divided by the change in disposable income that brought it about.
c. Equilibrium real GDP is $1,000 billion because that is the level of real GDP that equals aggregate planned expenditure.
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The opportunity cost of attending college might best be described as
A) the money that must be paid in order to attend college. B) the lowest-valued alternative use of the student's time. C) the highest-valued alternative use of the student's time. D) the value that the student attaches to not working.
Using Figure 1 above, if the aggregate demand curve shifts from AD3 to AD2 the result in the long run would be:
A. P1 and Y2. B. P2 and Y1. C. P3 and Y1. D. P3 and Y2.