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AveGali [126]
2 years ago
7

In Macroland, autonomous consumption equals 100, the marginal propensity to consume equals 0.75, net taxes are fixed at 40, plan

ned investment is fixed at 50, government purchases are fixed at 150, and net exports are fixed at 20. Short-run equilibrium output in this economy equals:___________. A.1,000. B.1,160. C.1,280. D.1,440.
Business
1 answer:
alina1380 [7]2 years ago
5 0

Answer:

B) 1,160.

Explanation:

First we must calculate planned aggregate expenditures (PAE) and then determine where Y = PAE:

PAE = consumption + planned investment + government spending + net exports = 100  + 0.75(Y - 40) + 50 + 150 +20 = 100 + 0.75Y - 30 + 50 + 150 + 20 = 290 + 0.75Y

Now we must determine where Y and PAE intercept:

Y = 290 + 0.75Y

Y - 0.75Y = 290

0.25Y = 290

Y = 290 / 0.25 = 1,160

*Planned aggregate expenditure = total planned spending, it differs from GDP because GDP includes unplanned investment.

PAE = C + Ip + G + NX   while  GDP = C + I + G + NX

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2 years ago
Suppose that in a given month $40 million is deposited into the banking system while $50 million is withdrawn. Assume that the r
vladimir1956 [14]

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$40 million was deposited while $50 million was withdrawn.

The net change in the banking system would therefore be,

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3 years ago
Assume personal tax rates are lower than corporate tax rates. From a tax-paying shareholder point of view, how should a firm spe
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Q: What determines the balance of production and consumption?
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