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Principles Macroeconomics, ECON 2105
Quiz # 10 Key
Name
:
Five multiple choice questions, please circle the
best
answer.
1. The planned aggregate expenditure equation of an economy is given by
PAE
= 150
,
000 + 0
.
85
Y.
If the value of current real output of this economy equals $1,012,000, the value of unplanned
business inventory investment equals
a.

$1000.
♠
$1,800
.
c.

$2
,
200.
d. $15
,
000.
e. none of the above.
Given
Y
= 1
,
012
,
000,
AE
= 150
,
000 and mpc=0.85, you need to ﬁnd
I
u
.
Y
=
AE
+
I
u
mps
1
,
012
,
000
1
=
150
,
000 +
I
u
0
.
15
now crossmultiply
150
,
000 +
I
u
= 0
.
15
×
1
,
012
,
000 = 151800
I
u
= 151800

150000 = $1
,
800
.
2. The planned aggregate expenditures equation of an economy is given by
PAE
= 1500 +
mpc
×
Y,
where mpc stands for the marginal propensity to consume and is
missing
. If the equilibrium
income of this economy equals 10,000(=
Y
e
), the missing mpc value equals
a. 0.4.
b. 0.65.
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 Fall '10
 BRIANALLENHUNT

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