Purchase Solution

Aggregate expenditure

Not what you're looking for?

Ask Custom Question

The spreadsheet lists the components of aggregate planned expenditure in the United Kingdom. The numbers are in billions of pounds.

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.
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.

Purchase this Solution

Solution Summary

This solution details how to solve an aggregate expenditure problem.

Solution Preview

a. Calculate autonomous expenditure.

Autonomous expenditure equals 220 billion

b. Calculate the marginal propensity to consume

Income increases from 100 billion to 200 billion
Consumption expenditure increases from 110 billion to 170 billion. Thus
The marginal propensity to consume = (170 - 110) / 100 = 0.6.

c. What ...

Solution provided by:
  • MBA, Aspen University
  • Bachelor of Science , Berea College
Recent Feedback
  • "Thank u"
  • "Thank You!"
  • "Thanks!"
  • "Thank you so much"
  • "Great job...thanks."
Purchase this Solution

Free BrainMass Quizzes
Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.