Congratulations again. You’ve just been appointed economic adviser to Examland.
ID: 1167359 • Letter: C
Question
Congratulations again. You’ve just been appointed economic adviser to Examland. The mpe is .90; autonomous investment is $950; autonomous government spending is $7,700; autonomous consumption is $10,500; and autonomous net exports are $850.
Instructions: Round your answer to the nearest whole number.
a. What is the level of income in the country?
Level of income: $___.
b. Autonomous net exports increase by $2100. What will happen to income?
Income (Click to select)rises/ drops/ unchanged by $____.
c. You’ve just learned the mpe changed from .90 to .60. How will this information change your answers in a and b?
Instructions: Round your answer to the nearest whole number.
Level of income: $____.
Income (Click to select)unchanged/drops/rises by $____.
Explanation / Answer
Congratulations again. You’ve just been appointed economic adviser to Examland. The mpe is .50; autonomous investment is $1,250; autonomous government spending is $8,400; autonomous consumption is $11,500; and autonomous net exports are $1,150.
Instructions: Round your answer to the nearest whole number.
a. What is the level of income in the country?
Level of income: ($______)
b. Autonomous net exports decrease by $600. What will happen to income?
Income (rises, drops, or unchanged) by ($_____)
c. You’ve just learned the mpe changed from .50 to .80. How will this information change your answers in a and b?
Instructions: Round your answer to the nearest whole number.
Level of income: ($______)
Income (rises, unchanged, or drops) by ($_____)
answer;
a) Y = C + I + G + NX
Consumption, C depends upon the income of the consumer so C = 11500 + 0.50Y
Y = 11500 + 0.50Y + 1250 + 8400 + 1150
Y - 0.50Y = 22,300
0.50Y = 22,300
Y = 22,300/0.50 = $ 44,600
b)
Y = 11500 + 0.50Y + 1250 + 8400 + (1150 - 600)
Y - 0.50Y = 21,700
0.50Y = 21,700
Y = 21,700/0.50 = $ 43,400
Income decreases by $ 1,200 (44,600 - 43,400).
c) when MPE = 0.80
Y = 11500 + 0.80Y + 1250 + 8400 + 1150
Y - 0.80Y = 22,300
0.20Y = 22,300
Y = 22,300/0.20 = $ 111,500
Level of income = $ 111,500
Income rises by $ 66,900 (111,500 - 44,600)
Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.