Based on research conducted by the Department of Economic Analysis, the government and policy advisors of an economy believe that the full employment GDP is $7500 billion, and Pe, the overall expected price level is 118. In addition, the researchers estimate that the short run aggregatesupply equation is Y - Ypot + 80 (P-Pe), where Ypot is the potential level of output. In 2016, the population was 400 million, and the structure of the economy was described by the following equations for household consumption behavior and taxes received: C = 100+ 0.8DI, and T = 0.25Ywhere all monetary values are in billions of dollars. Government spending was fixed at $1700 billion, and firm's investment behavior was fixed at $800 billion. Trading is allowed in this economy and in 2016, trading occurred such that the trade account was balanced. That is, net exports (X - IM)was equal to zero.(Question 9 of 20)Now consider that in in the following year (2017), the government decided to implement a policy aimed at moving the economy to full employment. In its decision to move the economy to full employment, they used government spending as the policy tool. The structure and fixed spendingbehaviors remain the same as they were in 2016, except for government spending. In addition, changes to the population's birth, mortality, and net migration levels were such that the population remained at 400 million. The policy was implemented, and it was successful in achieving its primarypurpose.What was the change in the equilibrium level of real GDP (in billions of dollars) that resulted from the government's policy in 2017? (report your answer to 2 decimal places) Based on research conducted by the Department of Economic Analysis, the government and policy advisors of an economy believe that the full employment GDP is $7500 billion, and Pe, the overall expected price level is 118. In addition, the researchers estimate that the short run aggregatesupply equation is Y = Ypot + 80 (P- Pe), where Ypot is the potential level of output. In 2016, the population was 400 million, and the structure of the economy was described by the following equations for household consumption behavior and taxes received: C = 100+ 0.8DI, and T = 0.25Ywhere all monetary values are in billions of dollars. Government spending was fixed at $1700 billion, and firm's investment behavior was fixed at $800 billion. Trading is allowed in this economy and in 2016, trading occurred such that the trade account was balanced. That is, net exports (X-IM)was equal to zero.(Question 8 of 20)Now consider that in in the following year (2017), the government decided to implement a policy aimed at moving the economy to full employment. In its decision to move the economy to full employment, they used government spending as the policy tool. The structure and fixed spendingbehaviors remain the same as they were in 2016, except for government spending. In addition, changes to the population's birth, mortality, and net migration levels were such that the population remained at 400 million. The policy was implemented, and it was successful in achieving its primarypurpose.What was the change in government spending (in billions of dollars) that was necessary to move the economy to full employment in 2017? (report your answer to 2 decimal places)

Potential GDP is the GDP or output that a country produces when all of its available inputs and…

Based on research conducted by the Department of Economic Analysis, the government and policy advisors of an economy believe that the full employment GDP is $7500 billion, and Pe, the overall expected price level is 118. In addition, the researchers estimate that the short run aggregate supply equation is Y = Ypot + 80 (P-Pe), where Ypot is the potential level of output. In 2016, the population was 400 million, and the structure of the economy was described by the following equations for household consumption behavior and taxes received: C = 100+ 0.8DI, and T = 0.25Y where all monetary values are in billions of dollars. Government spending was fixed at $1700 billion, and firm's investment behavior was fixed at $800 billion. Trading is allowed in this economy and in 2016, trading occurred such that the trade account was balanced. That is, net exports (X-IM) was equal to zero. (Question 8 of 20) Now consider that in in the following year (2017), the government decided to implement a policy aimed at moving the economy to full employment. In its decision to move the economy to full employment, they used government spending as the policy tool. The structure and fixed spending behaviors remain the same as they were in 2016, except for government spending. In addition, changes to the population's birth, mortality, and net migration levels were such that the population remained at 400 million. The policy was implemented, and it was successful in achieving its primary purpose. What was the change in government spending (in billions of dollars) that was necessary move the economy to full employment in 2017? (report your answer to 2 decimal places)

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC