AP 31 Help Save Exit Submit Check my work Real Domestic Out

AP 31 Help Save & Exit Submit Check my work Real Domestic Output, (GDP- Aggregate Expenditures. Economy, Billions Aggregate Exports (GDPPrivate Closed BillionsImports, Billions Net Exports, Expenditures, Billions on. Billions 3150 $200 5250 $300 $350 5400 s450 3190 $230 5270 5310 5350 $390 $430 530 $30 530 $30 $30 $30 530 $30 510 510 510 $10 $10 510 Private Open Economy, Billions $200 $240 $280 $320 5360 $20 520 5440 $480 $500 3470 Instructions: Round your answer to the nearest whole number Incorporate government into the table by assuming that it plans to tax and spenc S24 bhilion at each possible level of GDP Alsa assume that the tax is a personal tax and that government spending does not Induce a shift in the private aggregate expenditures schedule What Is the change in equilibrium GDP coused by t he eddinon of governme blloo Next

Solution

Marginal propensity to consume= c= ? in aggregate expenditure closed / ? in real domestic output

= (230-190) / (200-150) = 40/50= 0.8

Change in equilibrium gdp= 1/(1-c) * ( -T + G)

= 1/(1-0.8)*( -0.8*24 + 24)

= 5(-19.2 + 24)

= 24 billion.