L10 Multiplier

Question 1

Aggregate expected expenditure Depend on income?
Formulas?
Graphs?
MPs?

Answer 1

C-I induced expenditure 
Consumption
C=a+bYD
Savings
S=-a+(1-b)YD
YD:disposable income Y-T
a +ve b and m +ve less that 1

Question 2

AE Does not vary with rGDP

Answer 2

Autonomous expenditure

Planned I G X

Question 3

Aggregate expenditure schedule

Answer 3

List of level of expenditure planned at each level of rGDP
AE vs rGDP
Actual AE:rGDP
Planned not equal to actual unplanned changes in inventory

Question 4

Equilibrium expenditure

Answer 4

When planned AE equal rGDP graph meet.

Question 5

Change in auto E?

Multiplier?

Answer 5

Auto E^ rGDP^ so Induced E^ too

Amt auto E change magnified to determine change in equilibrium expenditure and rGDP

Change in Y/ change auto E

1/(1-slope of AE or MPC) if no import no income tax

Higher slope higher multiplier

Question 6

Views!
On multiplier
Explainnn

Answer 6

Classical
PL not fixed so when auto E AE^ PL ^ hence AE fall back down so multiplier 1

But Keynesian can result in 1.excessive inflation
2.Misallocation if productive resources

Question 7

Multiplier example

Answer 7

Example: From 1929-33, during the Great Depression, real GDP fell by 6% and unemployment doubled. At the same time, autonomous expenditure fell from £10.7 billion to £10.1 billion, mainly due to a fall in investment.

Question 8

Aggregate Planned Expenditure?

Answer 8

Planned C + I + G + (X-M)