(Solved): The above figure shows the AE curve and 45\deg line for an economy. a. If real GDP equals $8 trilli ...

The above figure shows the

curve and

line for an economy. a. If real GDP equals

trillion, how do firms' inventories compare to their planned inventories? b. If real GDP equals

trillion, how do firms' inventories compare to their planned inventories? c. What is the equilibrium level of expenditure? Why is this amount the equilibrium? 2.. Suppose the MPC is 0.75 . a. If there are no imports or taxes what is the multiplier? b. If there is an increase in government spending of $10billion, how much does equilibrium expenditure increase by? c. Now suppose the tax rate is

and the MPM is .1 , what is the multiplier? d. If there is an increase in government spending of $10billion, how much does equilibrium expenditure increase by? What is the relationship between the short-run aggregate supply curve and the short-run Phillips curve? Between the long-run aggregate supply curve and the long-run Phillips curve? From a Keynesian point of view, which is more likely to cause a recession: aggregate demand or aggregate supply, and why? Why do sticky wages and prices increase the impact of an economic downturn on unemployment and recession?