1 calculate ae given the information below and

Question

1. Calculate AE given the information below and completely fill in the table.

2. Where is equilibrium in this economy based on the table?

3. Using the injections-withdrawals approach complete the table and demonstrate that the point you chose in part 2 is the equilibrium.Go back to Chapter 8 if you forget how this is calculated.

4. Create another table and recalculate AE assuming that consumption has decreased at all levels by $25 (e.g. instead of consumption of 125 when total income is 95, consumption becomes 100).

5. Where is equilibrium in this economy now? (highlight the row)

6. Using the injections-withdrawals approach, complete the table again and demonstrate that the point you chose in question 4 is the equilibrium now.

7. If this economy had exports, explain the impact of the net export effect on fiscal policy, providing an example.

Taxes: $10 at each level of income

Investments: $15

Government Spending: $25

Total Income	Taxes	Disposable Income	C	S	I	G	AE
95			125
105			135
120			145
140			150
150			155
165			160
180			170
190			180
200			185
240			200
280			215
300			225

Injections-Withdrawals Approach

Item (Name the item here)	Injections (place the $ amount in this column)	Withdrawals(place the $ amount in this column)
Totals

 

Total Income	Taxes	Disposable Income	C	S	I	G	AE
95
105
120
140
150
165
180
190
200
240
280
300

Injections-Withdrawals Approach

Item (Name the item here)	Injections (place the $ amount in this column)	Withdrawals(place the $ amount in this column)
Totals