Problem: The figure illustrates the components of aggregate planned expenditure on Turtle Island. Turtle Island has no imports or exports, the people of Turtle Island pay no income taxes, and the price level is fixed.
Fig: Instead of 1992 dollars it should be “billions of 2000 dollars”
a. Calculate autonomous expenditure.
b. Calculate the marginal propensity to consume.
c. What is aggregate planned expenditure when real GDP is $6 billion?
d. If real GDP is $4 billion, what is happening to inventories?
e. If real GDP is $6 billion, what is happening to inventories?
f. Calculate the multiplier.