Please solve 11 & 12 Figure 2 Aggregate Expenditures in Mabrud Expenditures (bil
ID: 1154764 • Letter: P
Question
Please solve 11 & 12
Figure 2 Aggregate Expenditures in Mabrud Expenditures (billions of dollars per year) 45° line 1350 AE2 1300 1250 1200 1150 1150 1200 1250 1300 1350 Real GDP (billions of dollars per year) Figure 2 shows planned aggregate expenditures in Mahrud, an economy with both a government and foreign sector in which the other assumptions of the simple Keynesian Model apply. Use the graph to answer the next two questions. 11. If planned aggregate expenditures in Mahrud are AE1, equilibrium GDP will be $_ billion per year. a. $1150 b. $1250 c. $1300 d. $1200 12. Which of the following would result in the economy of Mahrud moving from point B to point A? I. An autonomous increase in investment spending of $50 billion II. An autonomous increase in exports of $50 billion III. An autonomous decrease in consumption of $50 billion a. I. only b. I. and II. c. III. only d. I, II., and III.Explanation / Answer
a) "D"
The equilibrium GDP will be $1,200. That is the point where the AE curve and the 45* line meet.
b) "B"
With an increase in the equilibrium income form the point B to A, there could be an increase in the Exports and investment in the economy.