Asst06f091 - AGEC 217 Assignment 6 Due Wednesday Name Seat...

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AGEC 217 Assignment 6 Due: Wednesday, 10/07/09 Name __________________________ Seat No. _____________ 1. The GDP in the economy is $14,100 but the full employment GDP is $14,400 while the MPC is .75. a. How much can be produced? __________________________ b. How much do folks want to buy? ____________________- c. Explain what problem the economy will have and why? d. Whose responsibility is it to handle this problem? ______________________ e. Name the problem solving process? ___________________________ f. State the two policy tools that can be used to solve this problem? g. Draw an income-expenditure model showing this situation. h. To solve this problem do we move equilibrium or full employment GDP? ______ i. How much must it be moved? __________ j. To find the amount of action the government must take to solve this problem, we use three equations. Carefully write the equations, substitute and show the desired result: 1. MPC =
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2. Multiplier = 3. ∆ GDP (E) = k. Now draw a new CIGX curve on your diagram in “g” above and use arrows and numbers to show clearly the direction and amount of movement.
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