- D.Exercise D1: Sketch the aggregate expenditure-output diagram with the recessiona...
- D.Exercise D2: Sketch the aggregate expenditure-output diagram with an inflationar...
- D.Exercise D3: An economy has the following characteristics: Y = National income T...
- D.Exercise D4: Table D7 represents the data behind a Keynesian cross diagram. Assu...
- D.Exercise D5: Explain how the multiplier works. Use an MPC of 80% in an example.
- D.Exercise D6: What is on the axes of an expenditure-output diagram?
- D.Exercise D7: What does the 45-degree line show?
- D.Exercise D8: What determines the slope of a consumption function?
- D.Exercise D9: What is the marginal propensity to consume, and how is it related t...
- D.Exercise D10: Why are the investment function, the government spending function, ...
- D.Exercise D11: Why does the import function slope down? What is the marginal prope...
- D.Exercise D12: What are the components on which the aggregate expenditure function...
- D.Exercise D13: Is the equilibrium in a Keynesian cross diagram usually expected to...
- D.Exercise D14: What is an inflationary gap? A recessionary gap?
- D.Exercise D15: What is the multiplier effect?
- D.Exercise D16: Why are savings, taxes, and imports referred to as leakages in calc...
- D.Exercise D17: Will an economy with a high multiplier be more stable or less stabl...
- D.Exercise D18: How do economists use the multiplier?
- D.Exercise D19: What does it mean when the aggregate expenditure line crosses the 4...
- D.Exercise D20: Which model, the AD/AS or the AE model better explains the relation...
- D.Exercise D21: What are some reasons that the economy might be in a recession, and...
- D.Exercise D22: What should the government do to relieve inflationary pressures if ...
- D.Exercise D23: Two countries are in a recession. Country A has an MPC of 0.8 and C...
- D.Exercise D24: Compare two policies: a tax cut on income or an increase in governm...
- D.Exercise D25: What role does government play in stabilizing the economy and what ...
- D.Exercise D26: If there is a recessionary gap of $100 billion, should the governme...
- D.Exercise D27: What other changes in the economy can be evaluated by using the mul...
Solutions for Chapter D: The Expenditure-Output Model
Full solutions for Principles of Economics | 2nd Edition
a person who is performing an act for another person, called the principal
the limit on the consumption bundles that a consumer can afford
an excess of tax revenue over government spending
the proposition that if private parties can bargain without cost over the allocation of resources, they can solve the problem of externalities on their own
two goods for which an increase in the price of one leads to a decrease in the demand for the other
the amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it
a tax designed to induce private decision makers to take account of the social costs that arise from a negative externality
a graph of the relationship between the price of a good and the quantity demanded
total revenue minus total cost, including both explicit and implicit costs
the price that balances quantity supplied and quantity demanded
the increase in total cost that arises from an extra unit of production
a situation in which economic actors interacting with one another each choose their best strategy given the strategies that all the other actors have chosen
two goods with right-angle indifference curves
the study of government using the analytic methods of economics
the ability of an individual to own and exercise control over scarce resources
a theory of exchange rates whereby a unit of any given currency should be able to buy the same quantity of goods in all countries
a dislike of uncertainty
a graph of the relationship between the price of a good and the quantity supplied
an excess of imports over exports
the costs that parties incur in the process of agreeing to and following through on a bargain