Macroeconomics

Macroeconomics Homework Chapters 9 & 10

Rachael N Reeves

Columbia Southern University

Chapter 9 , Question 1

( I have no way to graph the consumption)

a) Put income on the x-axis, consumption on the y-axis.

At x =100 and y =150 put a dot. At x =200 and y =200 put another dot.

Repeat for 300 and 400. Then connect the dots.

b) Slope is rise over run.

With each 100 increase in income (run), consumption goes up by 50 (rise).

50/100 = .5 = slope

c) repeat this for savings

Chapter 9, Question 4

a. negative, high tax, low consumption

b. negative, high interest rate, low consumption

c. positive, high confidence, high consumption

d. negative, high price, low consumption

e. positive, high confidence, high consumption

f. positive, high confidence, high consumption

Chapter 9, Question 9

https://www.coursehero.com/file/12441072/Macro-Ch-9-10-HW-LATEpdf/

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a. MPC = 0.9 --- multiplier 10 --- GDP reduces by $100 billion. b. MPC = 0.75 --- multiplier 4 --- GDP reduces by $ 40 billion. c. MPC = 0.6 --- multiplier 2.5 --- GDP reduces by $ 25 billion.

Chapter 10, Question 3

a. 14.2 trillion , 130

b. Expansionary, 0.2 trillion

c. 13.7 trillion, 110

d. Recessionary, 0.3 trillion

e. 14.0 trillion, 120

f. Recessionary, 106

Chapter 10, Question 5

Increases in technology, the accumulation of more machinery and equipment increases

productivity, the labor force increases.

An increase in AD does not affect potential output. There is no way for me to diagram this.

Chapter 10, Question 6

Examples of adverse supply shocks could be increases in oil prices or a drought that destroys

crops. In short, anything that drastically and immediately increases the cost of output is

considered an adverse supply shock.

Examples of beneficial supply shocks could be decreases in oil prices or a great, productive crop

season. Anything that drastically and immediately decreases the cost of output is considered a

beneficial supply shock.

https://www.coursehero.com/file/12441072/Macro-Ch-9-10-HW-LATEpdf/

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