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Macroeconomics, 15/e
Campbell R. McConnell, University of Nebraska, Emeritus
Stanley L. Brue, Pacific Lutheran University
Chapter 10 Aggregate Expenditures: The Multiplier, Net Exports, and Government
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Web-Based Questions
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Web-Based Questions
- Web-Based Question:
The multiplier-calculate a hypothetical change in GDP Go to
the Bureau of Economic Analysis website at www.bea.doc.gov
and select GDP and Related Data and Selected NIPA Tables to find the most
recent values for real GDP = Ca
+ Ig
+ G +
(X -
M).
Assume that the MPC is .75 and that, for each of the following, the values
of the initial variables are those you just discovered. Determine the new
value of GDP if, other things equal:
- Investment
increased by 5 percent.
- Imports
increased by 5 percent while exports increased by 5 percent.
- Consumption
increased by 5 percent.
- Government
spending increased by 5 percent.
Which
of the changes, a through d, caused the greatest change in GDP
in absolute dollars?
- Web-Based Question: Of
GDP gaps and recessionary gaps The St. Louis Federal
Reserve Bank website, www.stls.frb.org/fred/index.html,
provides data on both real GDP and potential real GDP for
the United States. Both are located as links under "Gross
Domestic Product and Components." What was potential
GDP for the fourth quarter of 1991? (Tip: Potential GDP
is at the very bottom of the listing.) What was the actual
level of real GDP for that quarter? What was the size difference
between the two-the GDP gap? Assuming that the multiplier
was 2.5 in that period, determine the size of the economy’s
recessionary gap.
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