When aggregate spending is greater than income____. a. unplanned inventory adjustment will remain the same. b. inventories will fall. c. the total amount of production in the economy is the same as the total amount of spending. d. inventories will rise. e. the total amount of production in the economy is greater than the total amount of spending. This question is based on the following equation which refers to a closed economy with no government Which of the following statements is/are correct? a) When income is zero, private savings are -100.
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a. The accompanying table shows gross domestic product (GDP), disposable income (YD), consumer spending $(C),$ and planned investment spending $\left(I_{\text {Planned }}\right)$ in an economy. Assume there is no government or foreign sector in this economy. Complete the table by calculating planned aggregate spending $\left(A E_{\text {Plamed }}\right)$ and unplanned inventory investment $\left(I_{ \text {Unplamed} )}\right.$ b. What is the aggregate consumption function? c. What is $Y^{*},$ income-expenditure equilibrium GDP? d. What is the value of the multiplier? e. If planned investment spending falls to $\$ 200$ billion, what will be the new $Y^{*} ?$ f. If autonomous consumer spending rises to $\$ 200$ billion, what will be the new $Y^{*}$ ?
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In an economy with no government and no foreign sectors, autonomous consumer spending is $\$ 250$ billion, planned investment spending is $\$ 350$ billion, and the marginal propensity to consume is $2 / 3$ a. Plot the aggregate consumption function and planned aggregate spending. b. What is unplanned inventory investment when real GDP equals $\$ 600$ billion? c. What is $Y^{*},$ income-expenditure equilibrium GDP? d. What is the value of the multiplier? e. If planned investment spending rises to $\$ 450$ billion, what will be the new $Y^{*}$ ?
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