Aggregate Planned Expenditure and Equilibrium Analysis in an Economy
What is the aggregate planned expenditure function for this economy?
What is the value of autonomous aggregate planned expenditure at a real GDP of $2000?
What is the value of induced aggregate planned expenditure at a real GDP of $500?
What happens to inventories when real GDP is $1000?
What is the value of equilibrium aggregate expenditure in this scenario?
How would the graph of aggregate planned expenditure change if net export declines by 30? What would be the new equilibrium value?
Aggregate Planned Expenditure Function:
The aggregate planned expenditure function is calculated as AE = C + I + G + (X – M), where AE represents aggregate planned expenditure, C is consumption spending, I is investment spending, G is government spending, X is exports, and M is imports.
Value of Autonomous Aggregate Planned Expenditure at $2000 GDP:
The value of autonomous aggregate planned expenditure is $1530 when the real GDP of the country is $2000.
Value of Induced Aggregate Planned Expenditure at $500 GDP:
The value of induced aggregate planned expenditure is $400 at a real GDP of $500.
Inventories at $1000 GDP:
When real GDP is $1000, inventories will remain unchanged as the economy is in equilibrium.
Equilibrium Aggregate Expenditure:
The equilibrium aggregate expenditure is $6650 in this scenario.
Graph of Aggregate Planned Expenditure with Net Export Decline:
If net export declines by 30, the graph of aggregate planned expenditure will shift downwards. The new equilibrium aggregate expenditure value would be $6500.
The given data provides insights into the calculations and implications of aggregate planned expenditure in an economy. Autonomous consumption, marginal propensity to consume, investment spending, government spending, net income taxes, and net export are key factors in determining the aggregate planned expenditure.
Aggregate Planned Expenditure Function:
The aggregate planned expenditure function is derived from the data provided. It includes consumption spending, investment spending, government spending, exports, and imports. Understanding this function is crucial in analyzing the components of aggregate planned expenditure.
Autonomous and Induced Expenditure:
Autonomous aggregate planned expenditure refers to the initial spending that does not depend on income level, while induced aggregate planned expenditure is influenced by changes in real GDP. Calculating these values helps in understanding the different components of aggregate planned expenditure.
Equilibrium and Inventories:
Equilibrium aggregate expenditure signifies a scenario where the demand for goods equals the supply, maintaining stability in the economy. Inventories remain unchanged in equilibrium situations due to the balance between supply and demand.
Graphical Representation:
The graph of aggregate planned expenditure is influenced by factors such as net export. A decline in net export leads to a downward shift in the graph. Understanding these graphical changes helps in visualizing the impact on equilibrium and overall expenditure in the economy.