# autonomous aggregate demand / short-run output / multiplier

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Category: Economics > Macroeconomics

Subject: calculate autonomous aggregate demand / short-run output / multiplier

Details: C = 350 + 0.75(Y-T) - 200r

Ip = 200 - 500r

G = 250, T = 200, NX = 50

r = 5.75%

Answer the following questions using the above information. Show workings.

a) Caluclate autonmous aggregate demand.

b) Calculate the short-run output.

c) Calculate the multiplier.

d) If Y* is 2500 what is the amount of the gap, and what type of output gap is it?

e) What would the interest rate have to be to eliminate the output gap?

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Calculate autonomous aggregate demand / short-run output / multiplier

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a) calculate autonomous aggregate demand

<br>C = 350 + 0.75(Y-T) - 200*5.75% =350 + 0.75(Y-200) - 11.5

<br>C = 350 + 0.75(Y-T) - 200r =350 + 0.75Y-150 - 200r

<br>C = 188.5 + 0.75Y

<br>And I = 200 - 500r =200 - 500*5.75%= 171.25

<br>

<br>autonomous aggregate demand is

<br>AD=C+I+G+NX=188.5 + 0.75Y+171.25+250+50= 659.75 + 0.75Y

<br>then ...

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