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Unformatted text preview: 3) a) Fill out the table below. The consumption function is: C = $100 + .5 x YD (billions). At what level of real GDP would this economy be at equilibrium? (Table is in billions.) Real GDP YD C I planned AE planned I unplanned 0 200 200 200 400 200 600 200 800 200 1000 200 b) Lets say that for whatever reason businesses decided to decrease their planned investment from $200 billion to nothing. Fill out the table below (which is also in billions) and find the new equilibrium for the economy: Real GDP AE planned (origional) AE planned (after $200 billion decrease in I planned ) 0 200 400 600 800 1000...
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This note was uploaded on 09/08/2011 for the course ECON 100 taught by Professor Pgking during the Spring '08 term at S.F. State.
- Spring '08