1. The spreadsheet below lists the components of aggregate planned expenditure in the United Kingdom. The numbers are in billions of pounds.
A B C D E F G
1 Y C I G X M
2 A 100 110 50 60 60 15
3 B 200 170 50 60 60 30
4 C 300 230 50 60 60 45
5 D 400 290 50 60 60 60
6 E 500 350 50 60 60 75
7 F 600 410 50 60 60 90
a. Calculate autonomous expenditure. Hint: Since these are all linear functions and because the spreadsheet does not list GDP (Y) of zero, you must extrapolate to calculate the value of consumption expenditure and imports when GDP equals zero.
b. Calculate the marginal propensity to consume.
c. What is aggregate planned expenditure when real GDP is 200 billion pounds?
d. If real GDP is 200 billion pounds, what is happening to inventories?
e. If real GDP is 500 billion pounds, what is happening to inventories?
f. Calculate the multiplier.