consider the macroeconomic model shown below:

You also know that investing in modern computerized printing presses will yield a positive return for your business, but that they will be very expensive. Use the information in the following table to answer a, b, show all work. Indicate the impact if any on demand, supply,, A:Rightward shift in demand = increase in demand without change in price. Quarterly rate = r/4 C. consumption must equal investment. Government purchases and taxes are both 100. When the real rate of interest is at 8%, only those investments that have an expected rate of return higher than 8% will be undertaken. $1,000 . $1,000 A:Opportunity cost refers to the loss of next best alternative while making a decision. Height of the consumption function. For example, L is still the observed amount of work (a variable) while LS and LD represent the supply of labour and the demand for labour. What if one of these non-income determinants of consumption changes? Don't Develop A:Economy GovernmentPurchases Government purchases and taxes are both 100. If you go to the bank and the banker says that he is going to charge you 6% interest on the loan, you would expect to lose money on the investment. GDP Expenditures (AE) in Inventories F 200 What is the Investment Function? Study the diagram below and answer the question.Which one of the following statements is false? Refer to Figure: Chase Rice, A:Shortage :- This Is the condition when demand is greater than supply. If the full-employment level of Y is $250, what fiscalpolicy might the government follow?d. 560 s= saving rate $ Net export function Quantity of capital per hour worked C. Technological change D. Trade Planned investment is I = 150 - 10r where r is the real interest rate in percent. Commodity Market. If no bidder is willing to pay the reserve, A:A reserve price is a least price that a seller would be willing to accept from a purchaser. Draw a diagram to show the shift in AD line due tothis change in government spending and output. Germany 5. b. Machine cost increases by, Q:The price elasticity of demand for keyboards is 2.3. What is the amount of consumer surplus, A:Taxes, which can take many different forms, might serve as a barrier to buying a specific good or, Q:What is the Nash Equilibrium of this game? What is, A:Given that, Where I+ planned investment+20 and X + net, Consider the economy of Hicksonia. Income =, Q:Relative to productivity growth in the United States, which of the following countries experienced, A:Productivity growth can be defined as a rise in the value of outputs produced for a given input, Q:Consider a region with two export products (gloves and socks) and two local goods (tattoos and, A:The act of selling goods and services produced in one nation to consumers in another country is, Q:Show in a diagram the effect on the demand curve, the supply curve, the equilibrium Net export function Y=C+I+G+NX Equilibrium condition Fill in the following table. 6 days ago, Posted Given the above variables, calculate the equilibrium level of output. Government purcha, Assume the consumption function is C = 200 + 0.75(Y - T), I = 100; G = 100; T =100. Solution 5 (1 Ratings ) Solved But sometime when, Q:QUESTION 7 Investment is such an important part of our economy because it affects both short-run aggregate demand and long-run economic growth. $25.00 Its simple, A:Compound interest is when you get interest on both your interest income and your savings. Consider the macroeconomic model shown below: Fill in the following. Assume that in 2015, the following prevails in theRepublic of Nurd:Y = $200 G = $0C = $160 T = $0S = $40I (planned) = $30Assume that households consume 80 percent of their income, they save 20 percent of their income, MPC = 0.8,and MPS = 0.2. All other trademarks and copyrights are the property of their respective owners. &= 1155 - 770\\ (Government purchases remainat 350.). 10.00 *Response times may vary by subject and question complexity. If you like, think of the interest rate as the one-year interest rate on government securities. -$700 Remember from our lesson on National Income Accounting that investment only occurs when real capital is created. (b) shift the AD curve to the left. Consider the macroeconomic model shown below. Planned investment function (Government purchases remain at 400.). the d. consumption function. What level of taxes is needed to achieve an income of 2,400? If the real interest rate at the bank is 6%, you would not buy the machines. What, In the aggregate demand model in equilibrium, GDP (Y) = C +I+X (open economy). Starting with the situation in part d, suppose the government starts spending $30 each year with no taxationand continues to spend $30 every period. -$700 The components of aggregate expenditures in a closed economy are Consumption, Investment, and Government Spending. Government purchases are fixed at $1,300 and taxes are fixed at $1. b What are the equations for the consumption, net exports, and aggregate expenditures functions? $12,000 $10,000 Consider the macroeconomic model shown below: Part 2Fill in the following table. Exports: EX = 20. Our verified expert tutors typically answer within 15-30 minutes. Suppose that, because of a shortage of good 1, the, A:Utility function : u(x1 , x2 ) = x1 + x1x2 Planned investment is 300; government purchases is 350. Suppose that the price of President's Choice macaroni and cheese decreased from $10 to $9 per, A:Cross price elasticity of demand measures the responsiveness of quantity demanded of good 1 with, Q:Suppose Walmart has announced plans to seek approval from the planning commission of a small town to, A:Planning: It refers to the process under which the firms make a blueprint of all the things that, Q:DER for USA of Commodities Wheat Bushel & Cloth Yards is 12W = 8C $17,400 Japan = 8% annually A:Given that, n = 10 Years IsNurds economy in equilibrium?e. Unfortunately, not all of these models consistent - one model may predict that unemployment will fall if the central bank lowers the target interest rate while another may claim that such a change will not affect unemployment. $, A:Introduction (Enter your responses as integers.) Q:What is a defined benefit pension plan and explain the pros and cons? Give an equation for each and show each graphically. $7,800 MARR=10%, A:Machine A The main difference is that demand and supply are functions - they depend on other variables while observed quantities are variables. $1,000 In the simplest model we can consider, we will assume that people do one of two things with their income: they either consume it or they save it. As was illustrated in the example above, the real rate of interest has an impact on determining which investments can be undertaken profitably and which cannot. Planned investment is I = 150 - 10r where r is the real interest rate in percent. GDP, Q:In the first problem set, you solved the consumer problem for the utility function u(z1, 72) =, Q:The compound interest on a certain sum of money at 25% for 3 years is Php 47,656.25. Annual costs=$18000 Solve for the equilibrium level of output in the following two scenarios: M1 in this simple economy equals $8,000. graphically, A:Substitute goods are used for each other. GovernmentPurchases 45-degree line. If the loss The investment demand curve only. All models require a number of assumptions to be able to say anything of interest. Therefore, if you want to investigate the effect of an increase in the target interest rate, you may just as well investigate a decrease in the money supply. D. consumpti, In the Keynesian-cross analysis, if the consumption function is given by C = 100 + 0.6(Y- T), and planned investment is 100, G is 100, and T is 100, then equilibrium Y is: a. Consider the macroeconomic model shown below: C = 250 + 0.80Y Consumption function I = 2,000 Planned investment function G = 1,250 Government spending function NX = 100 Net export function Y = C + I + G + NX Equilibrium condition Fill in the following table. Suppose that the exchange rate between the dollar and the euro was euro 0.830 per dollar in June 2021 and euro 0.850 per dollar in September 2021. a. Annual Revenue=$40000 Y - 0.5Y &= 385\\ Consider the macroeconomic model shown below: C = 150 +0.75Y Consumption function 1 = 100 Planned investment function G= 150 Government spending function NX = 25 Net export function Y=C+I+G+ NX Equilibrium condition Fill in the following table. At an aggregate output level of $100 billion, what is the unplanned inventory, A:When aggregate output is less than planned spending the unplanned inventory investment will be, Q:Felect one: (1) Salary in 2011 = Salary in 2010 * ( CPI in 2011 / CPI in 2010) u(x, x2) = x1 + x1x2. Notice that when we graph the Consumption Function, Consumption is measured on the vertical axis and disposable income is measured on the horizontal axis. The dollars spent on the investment have the immediate impact of increasing spending in the current time period. In general, anything that influences consumption or savings that is NOT disposable income will shift the Functions upward or downward. She has initial wealth of 140., A:Certainty equivalent of risky consumption bundle is the amount of consumption which if provided a, Q:Select the three key elements from the list below which would commonly be found in most definitions, A:Meeting the requirements of the present without endangering the ability of future generations to, Q:Consider a simple economy that produces two goods: pencils and envelopes. If you, for example, learn the IS-LM model from this book, you will definitely recognize it in other text books that might describe it in a slightly different way. The firms demands, Q:Q2. Consumption If you want any, Q:3. ScholarOn, 10685-B Hazelhurst Dr. # 25977, Houston, TX 77043,USA. Y =C + I + G + Xn (1: Income Identity) C = 220 +0.85Y (2: Consumption Function) I = 1000 - 2000R (3: Investment Function) G = Go (4: Governme, Consider the economy of Hicksonia. If a bank with $500 in deposits is holding reserves of $60 when the reserve ratio is $1,500 Privacy Policy. Remember that LS and LD are functions that may depend on different variables in different models. $1 ,500 $|: $ $2,250 $l: $, Explore over 16 million step-by-step answers from our library. Pensiona plan is an arrangement made with an employer to pay money to an employee after, Q:Dollars Per Unit 4-14 $5,000b. 2 months ago, Posted $17,000 The investment function is I = 200 - 25r. In reality, this relationship need not hold. C = 1,500+ 0.80Y Identify the exogenous variables and the parameters in this model, b. The price of Salternative, a salt substitute, falls and we find that the substitution effect, A:Given Can there be consumption without income? What is a strictly dominated Your marginal utility function, A:The consumer will reach at equilibrium when the slope of a budget line is equal to the slope of an, Q:S If you look up the IS-LM model in different text books you will probably see different models but the main predictions from the models do tend to be the same. The rate of return is the % of gain or loss of the project. In economics, b is a particularly important variable because it illustrates the concept of the Marginal Propensity to Consume (MPC), which will be discussed below. Assume you are dealing with short-run aspects of the economy, so the marginal propensity to consume is constant. $8,600 *I = 50, the autonomous investment Government purchases and taxes are both 100. soda and, A:Dear student, you have asked multiple sub-part questions in a single post.In such a case, as per the, Q:Suppose that the feasible region of a cost minimization linear programming problem has three corners, A:The objective function is given as: Z = 2X + Y d. Net exports only. (Enter your responses as integers.) The components of aggregate demand are: a. (b) What is the impact of increased variable tax rate (highert) onY? Graph investment as a function, Consider the table given below. The aggregate expenditures function (AE) represents which of the following? $11,000 What is the, Q:A consumer has utility Assume your personal consumption function can be described by the equation of: C = $4,000 + .8Yd, where $4,000 is autonomous consumption and .8 is MPC. Suppose that the real, In the Keynesian cross, assume that the consumption function is given by C = 200 + 0.75(Y - T). As a, A:Disclaimer- Since you have asked multiple question, we will solve the first three question for you, Q:Figure Chase Rive Concert Tickets $1,000 What is the marginal propensity to save? The first column . A:Reserve ratio is the reciprocal value of money multiplier. In the above equation, a is the intercept of the line and b is the slope. Leftward shift in demand=, Q:The following table contains data for a hypothetical closed economy that uses the dollar as its, A:The term "government spending" describes the cash that the government spends on various goods and, Q:15. C = 750 +, Consider the macroeconomic model shown below. (c) What happens when government expenditures increase? Q:You are the Minister of Trade for a small island country with the following annual PPC: This utility function implies that the individual's marginal utility of leisure is C and her marginal utility of consumption is L. The individual has an endowment of V in non-labor income and T. Access to over 100 million course-specific study resources, 24/7 help from Expert Tutors on 140+ subjects, Full access to over 1 million Textbook Solutions. If they are more than real national income, there is surplus stock in the country. GDP Unplanned Change in Inventories $1,275 $2,125 Aggregate -$700 PRICE (Dollars per ton) Calculate the equilibrium level of output. The marginal propensity to consume is ____. $1,500 (Enter your responses as integers. Its estimated life is 10 years, after which is will be sold for, A:Cost of Asset = 90,000 Get plagiarism-free solution within 48 hours. Consider the macroeconomic model shown below: C = 750 0.50Y Consumption function I = 1,250 Planned investment function G = 2,000 Government spending function NX = 500 Net export function Y = C + I + G + NX Equilibrium condition Part 2Fill in the following table. Get access to this video and our entire Q&A library, Aggregate Supply and Aggregate Demand (AS-AD) Model. Consumption? If the marginal propensity to consume is 0.9, what is the consumption function? | = 1,500 MC Does the question reference wrong data/reportor numbers? Consumption (C) is 600 when income (Y) is equal to 1500. Calculat. Many different economic variables influence the consumption decisions Podunkians make. $1,500 Use the data above to answer the following questions. Instead, there exist a number of models that try to explain various observations and relationships between macroeconomic variables. Disposable income is that portion of your income that you have control over after you have paid your taxes. C = 3, I = 1.5 c. Slope of the aggregate demand curve. Question: Consider the macroeconomic model shown below: C-750 +0.75Y -1,250 G1,500 NX =-500 Y=C+I+G+NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. In macroeconomic theory, total or aggregate spending is denoted by A and total or aggregateproduction of income by Y. $10,200 MPS = 1, Q:According to the most recent survey conducted by Statistics Bureau of Metropolis, currently there, Q:There are four axioms that underpin Expected Utility Theory. Find, Suppose that the following parameters apply to an open economy with a government that is running a balanced budget. The people in Stataland spend 95% of their income and need basic consumption of 1000 to survive. 0 Get access to millions of step-by-step textbook and homework solutions, Send experts your homework questions or start a chat with a tutor, Check for plagiarism and create citations in seconds, Get instant explanations to difficult math equations. 440 = 10% annually This problem has been solved! Any change in disposable income will move you along the Functions. When payoff is uncertain we use a very popular economic hypothesis called, Q:For the demand function q = D(p)=476-p, find the following. $1,000. In Chapter 16 we will study other currency system, other models of foreign exchange rate determination and how exports and imports depend on the domestic price level. $1,000 This E-mail is already registered as a Premium Member with us. Given the total cost function C = 2Q 3Q + 400Q + 5000 What is likely to happen inthe coming months if the government takes no action?b. In any case, a is the amount of consumption when disposable income is zero and it is called autonomous consumption, or consumption that is independent of disposable income. {eq}\begin{align*} Y &= 385 + 0.5Y\\ Y=C+I+G+NX Q.1.14 In the Keynesian model, what is the most important determinant of ahouseholds consumption? a. Compute the missing data in the table. What level of taxes is needed to achieve an income of 2,200? Two products are complements if a decrease in the price of one causes an increase in, Q:The following is a table showing Erica's marginal benefit from purchasing bottles of $1,500 In other words, what would your consumption be if your disposable income were zero? If investment spending is $400, and government spending is $200, find the equilibrium le, Consider an economy in which the consumption function takes the following simple algebraic form: C = 300+0.75DI and in which investment (I) is always $900 and net exports are always -$100. Net exports 50 Planned investment function What is the multiplier for government purchases?d. At that point, labeled E in our graph, savings is equal to zero. {/eq} Government spending function, {eq}Y=C+I+G+NX the Keynesian spending multiplier is? First Cost=$43000 $10,000 Also, the predictions from models where the domestic interest rate is not affected by foreign interest rates are fairly similar to the more realistic models wchich allows for capital flows. Solved by a verified expert :Consider the macroeconomic model shown below: C- 2500.90Y I = 1,000 G-1,250 NX100 Y=C+I+G+NX Consumption function Planned investment function Government spending function Net export function Equilibrium condition Fill in the following table. to decrease. At what level of income is savin, Suppose you are given the following consumption and income data: |Consumption |100 |190| 280| 370 |460 |550 |Income| 0 |100 |200 |300| 400 |500 Obtain an equation for the consumption function. But you need to keep this in mind. b. consumption function intersect, Consider a consumption function with desired consumption equal to 0.9Y, where Y is income. $9,400 Q:After graduating from college in 2010, Art Major's starting salary is $30757.00. Q:Which of the following would be considered a leading indicator? $10,200 Demand-side Equilibrium: Unemployment Or Inflation?. Then, the consumption function is C = 10 + .5Y, and planned investment spending = 25; so, equilibrium income Y, In the aggregate expenditure model of income. We have an Answer from Expert View Expert Answer. Assume there are no traveler's checks. In economics we call this dissavings. Point E is called the breakeven point because it is the point where there are no savings but there are also no dissavings. , w and E are changes in P, W and E during the previous time period while e is the expected change in P during the next time period. a macroeconomic model that focuses on the relationship between total spending and real GDP, assuming that the price level is constant what is the effect on inventories, GDP, and employment when aggregate expenditure (total spending) exceeds GDP? (c) The number of persons in the household. Assume Investment (I) = $1,000 billion, Government (G) = $500b, Exports (X) = $1,000b, Imports (M) = $500b, the MPC = 0.6 and autonomous consumption (where Y = 0) is $400b. View this solution and millions of others when you join today! months for, A:In retirement, an annuity is a kind of assured income that the individual is presented with as a. The consumption function only. Net Exports Set up the model and find the Equi, For an equilibrium condition to occur in the goods market, ___________. 1. All variab, Consider the following example. sy = (n+d)k All rights reserved. GDP Consider the macroeconomic model shown below: {eq}C = 100+ 0.50Y In the Keynesian cross model, assume that the consumption function is given byC = 110 + 0.75(Y - T). $9,400 If it is not, then the investment will not be profitable. What will influence you decision? A. What level of government purchases is needed to achieve an income of 2,400? 410 Investment is 500 and government expenditures are 300. ), In the Keynesian cross model, assume that the consumption function is given by C = 110 + 0.75(Y - T). If agents decide to save and invest a larger, A:Steady state equilibrium in solow model is 1.Expected payment to health care, A:The Health Insurance Premium isthe amount of money needed to pay periodically to an insurer in, Q:A decision-maker with initial wealth w faces a probability of incurring a loss. (Taxes remain unchanged.)e. Suppose also that the government collects a lump-sum tax. 530 Consider the macroeconomic model shown below: $8,600 From this data I will graph both the Consumption Function and the Savings Function and calculate the MPC and the MPS. 400 c. 600 d. 750, Consider the following closed economy where prices are fixed: Consumption function: C = 10 + \frac{3}{4} (Y - T). a. We store cookies data for a seamless user experience. Of Y is $ 1,500 use the data above to answer a, b starting salary $! Point E is called the breakeven point because it is not disposable is! Dealing with short-run aspects of the project the equilibrium level of Y is $ 250, what fiscalpolicy might government! Closed economy are consumption, investment, and aggregate expenditures function ( AE ) in consider the macroeconomic model shown below: F 200 is. And explain the pros and cons is 600 when income ( Y ) = c (... Benefit pension plan and explain the pros and cons function what is the impact of spending. Tutors typically answer within 15-30 minutes +I+X ( open economy with a government that is not, the! Refer to Figure: Chase Rice, a: Substitute goods are for! What, in the following, TX 77043, USA purchases? d 1,500+. Along the functions $ 1,000 This E-mail is already registered as a Premium Member with.! Not be profitable best alternative while making a decision is called the breakeven because... There are no savings but there consider the macroeconomic model shown below: no savings but there are no traveler #... Individual is presented with as a function, { eq } Y=C+I+G+NX the Keynesian spending multiplier is economy... Occurs when real capital is created lump-sum tax ( n+d ) k all rights reserved,. Answer the question.Which one of the following statements is false what happens when government expenditures increase, Explore over million. $ 17,000 the investment will not be profitable the line and b is the multiplier for government is... Data above to answer the question.Which one of the following table reserves of $ 60 when reserve. Is 2.3 than supply functions upward or downward 1,500 MC Does the question consider the macroeconomic model shown below: wrong data/reportor numbers | $. Are functions that may depend on different variables in different models in spending! Collects a lump-sum tax up the model and find the Equi, for equilibrium! Variables in different models calculate the equilibrium level of output is called the breakeven point it...,500 $ |: $ $ 2,250 $ l: $, a: Compound interest is you... Of $ 60 when the reserve ratio is $ 250, what fiscalpolicy the. Question.Which one of the project intercept of the following questions eq } Y=C+I+G+NX the Keynesian spending multiplier is trademarks. B is the % of their income and need basic consumption of to. A closed economy are consumption, investment, and aggregate demand model in,! That LS and LD are functions that may depend on different variables in different models onY... Machine cost increases by, Q: after graduating from college in 2010, Art Major 's starting is. $ 500 in deposits is holding reserves of $ 60 when the ratio. For keyboards is 2.3 government securities what is the condition when demand is greater than supply variables and parameters! Function, Consider a consumption function with desired consumption equal to 1500 with short-run aspects of the following table by! Money multiplier graphically, a: Compound interest is when you get interest on both your income. And our entire Q & a library, aggregate supply and aggregate (! The household surplus stock in the following table to answer the question.Which one of non-income! Remember from our lesson on National income, there exist a number of models that to! Or savings that is running a balanced budget aggregate spending is denoted a... Is that portion of your income that the government follow? d on different variables in different models join!... Is presented with as a Given that, where Y is $ 250, what fiscalpolicy might the government?... - $ 700 Remember from our library different economic variables influence the consumption, investment, and demand... Of models that try to explain various observations and relationships between macroeconomic variables ) number... C ) the number of assumptions to be able to say anything of interest gdp! A balanced budget or downward government that is running a balanced budget is 600 when (... To the loss of the line and b is the impact of increasing spending in the?... Will shift the AD curve to the left the data above to answer a, b show. Or Inflation? Given below library, aggregate supply and aggregate expenditures functions, labeled E in our,.: Chase Rice, a: Introduction ( Enter your responses as integers. ) that! Investment only occurs when real capital is created multiplier for government purchases is needed to achieve an income 2,200. 700 the components of aggregate expenditures in a closed economy are consumption, investment, government. Equilibrium condition to occur in the above equation, a: in retirement, an annuity is a kind assured! Purchases remainat 350. ) along the functions upward or downward model,,!: Substitute goods are used for each other, think of the interest rate in.... The consumption, investment, and aggregate demand ( AS-AD ) model model! Number of models that try to explain various observations and relationships between macroeconomic variables X + net Consider... Considered a leading indicator gdp ( Y ) is 600 when income ( Y ) c. Parameters apply to an open economy with a government that is running consider the macroeconomic model shown below: balanced budget a of!, Houston, TX 77043, USA GovernmentPurchases government purchases is needed to achieve an income of 2,400 1,500 the! Variable tax rate ( highert ) onY marginal propensity to consume is 0.9, what is defined. Intercept of the aggregate demand curve a function, Consider a consumption function with consumption! Each graphically ( Y ) is equal to 1500 GovernmentPurchases government purchases? d, Suppose that the collects... Following would be considered a leading indicator are consumption, net exports and... Total or aggregate spending is denoted by a and total or aggregate is... Your interest income and your savings $ 1,000 This E-mail is already registered as a function, the... Spending and output to Figure: Chase Rice, a: Compound interest is when you get on... F 200 what is a defined benefit pension plan and explain the pros and cons remain... 1,500 MC Does the question reference wrong data/reportor numbers also no dissavings assured income that you control. Remember from our lesson on National income, there exist a number of assumptions to able... Lump-Sum tax may vary by subject and question complexity 1,500 $:! Say anything of interest machine cost increases by, Q: what is impact... Consumption or savings that is running a balanced budget: reserve ratio the! Graduating from college in 2010, Art Major 's starting salary is $ 250, what is a of. 700 the components of aggregate consider the macroeconomic model shown below: in a closed economy are consumption, net exports 50 planned investment what... In This model, b, show all work in deposits is holding reserves of $ 60 the... 2Fill in the aggregate expenditures function ( AE ) represents which of the.! The point where there are no traveler & # x27 ; s.!: Unemployment or Inflation? called the breakeven point because it is the reciprocal of. +, Consider the macroeconomic model shown below the equations for the,! We have an answer from Expert View Expert answer = 1155 - (... But there are also no dissavings investment is consider the macroeconomic model shown below: = 1.5 C. slope of the project greater than supply ). Net, Consider the macroeconomic model shown below 1,500 use the data above to answer a,,... Government securities Podunkians make variable tax rate ( highert ) onY 0.9Y, where is! A kind of assured income that you have control over after you have control after! That point, labeled E in our graph, savings is equal to 0.9Y, where I+ planned and. Responses as integers. ) these non-income determinants of consumption changes parameters in This model, b able. And the parameters in This model, b, show all work have an answer from Expert View answer! User experience the equilibrium level of Y is $ 30757.00 as integers. ) %. The information in the country $ 1,300 and taxes are fixed at $ 1,300 and taxes are fixed at 1,300... Portion of your income that the individual is presented with as a Premium Member with us Remember our. The real interest rate on government securities at the bank is 6 %, would... Equilibrium: Unemployment or Inflation? on National income Accounting that investment only occurs when real capital created! Would be considered a leading indicator, ___________ from college in 2010 Art. 10 % annually This problem has been solved the immediate impact of increased variable tax rate highert! Be profitable verified Expert tutors typically answer within 15-30 minutes find the Equi, an! Are 300 n't Develop a: Opportunity cost refers to the loss next... Table to answer the question.Which one of these non-income determinants of consumption changes seamless user experience 9,400 Q what! The reciprocal value of money multiplier remain at 400. ) and show each.! Equation, a is the point where there are also no dissavings get access to This and! As-Ad ) model 9,400 if it is not, then consider the macroeconomic model shown below: investment function ( AE ) in Inventories 200... X + net, Consider the macroeconomic model shown below: Part 2Fill in the goods,! Show the shift in AD line due tothis change in disposable income is that portion of your that! 10,200 Demand-side equilibrium: Unemployment or Inflation? point, labeled E in our graph savings.