What does the 45-degree line in the Aggregate Expenditures model represent? all saving and no consumption...

What does the 45-degree line in the Aggregate Expenditures model represent? all saving and no consumption maximum consumption and maximum saving no consumption and no saving a reference line where income equals spending

Expert Solution

Ans.- a reference line where income equals spending

45 degree line is a reference line where income equals saving. It's the same line Y=X as we draw in the X-Y plane , just we put X= income and Y = spending. This line is used to find the equilibrium level of income or spending.

Rahul Sunny answered 2 years ago

Graphically illustrate the aggregate consumption and saving functions.

Graphically illustrate the aggregate consumption and saving functions. Explain these functions with at least 200 words. You may give examples.

Table 2: All figures in Billions of Dollars Aggregate Output/Income Aggregate Consumption Planned Investment Saving Govt....

Table 2: All figures in Billions of Dollars Aggregate Output/Income Aggregate Consumption Planned Investment Saving Govt. Spending Net Taxes 1,000 680 200 120 200 200 1,100 760 200 140 200 200 1,200 840 200 - 200 200 1,300 - 200 180 200 200 1,400 1,000 200 - 200 200 1,500 1,080 200 220 200 200 1,600 - 200 240 200 200 Please show calculation. a. Complete the table and determine the aggregate expenditure and the unplanned inventory change at all...

What does an aggregate demand curve represent? What are the three reasons the aggregate demand curve...

What does an aggregate demand curve represent? What are the three reasons the aggregate demand curve is downward sloping? What government policies can shift the aggregate demand curve? What does the aggregate supply curve represent? Why is the short-run aggregate supply curve different than the long-run aggregate supply curve? When aggregate demand shifts to the right, what happens to price level, output, and unemployment in the short-run? (Note that employment is not explicitly shown on the AD/AS model but will...

3. Show what happens to the Aggregate Expenditures line if the country runs a trade surplus,...

3. Show what happens to the Aggregate Expenditures line if the country runs a trade surplus, i.e. draw in a new curve labeled C+I+G+Xn or describe where that new curve goes. (10 points) 4. Mr. A makes $50,000 a year and pays $10,000 in taxes. Ms. B makes $30,000 a year and pays $6,000 in taxes. Find the tax rate and after tax income for each of them. Identify what type of tax this is – progressive, flat or regressive....

30. An increase in household saving causes consumption to A. rise and aggregate demand to increase....

30. An increase in household saving causes consumption to A. rise and aggregate demand to increase. B. rise and aggregate demand to decrease. C. fall and aggregate demand to increase. D. fall and aggregate demand to decrease. 35. Which of the following Fed actions would both decrease the money supply? A. buy bonds and raise the reserve requirement B. buy bonds and lower the reserve requirement C. sell bonds and raise the reserve requirement D. sell bonds and lower the...

Using the following aggregate expenditures table, answer the questions that follow. Income (Y), in $ Consumption...

Using the following aggregate expenditures table, answer the questions that follow. Income (Y), in $ Consumption (C), in $ Saving (S), in $ 2,200 2,320 −120 2,300 2,380 −80 2,400 2,440 −40 2,500 2,500 0 2,600 2,560 40 2,700 2,620 80 2,800 2,680 120 2,900 2,740 160 3,000 2,800 200 Compute the APC when income equals $2,300 and the APS when income equals $2,800, What happens to APS as your income goes up? Compute the MPC and MPS. Do...

Q2: Assume that factors that affect the aggregate expenditures of thesample economy, which are desired consumption,...

Q2: Assume that factors that affect the aggregate expenditures of thesample economy, which are desired consumption, taxes, governmentspending, investment and net exports are given as follows: •Cd=600+0.6 YD, •T=100 +0.2Y, •G=400, •Id=300, •NXd=200 – 0.1Y, •TR=0 a) According to the above information explain how the tax collection changes as income in the economy changes? b) Write the expression for YD.

Discuss the Solow Model. How does saving, consumption, production, income and population affect economic growth?

Graphically illustrate the aggregate consumption and saving functions. Explain these functions with at least 200 words....