Total Output Planned Aggregate Expenditures (Two-Sector Economy)
(Real GDP in billion dollars) (in billions)
5,000 5,250
5,500 5,500
6,000 5,750
6,500 6,000
7,000 6,250
a) If the current output rate is $5.0 trillion, what will tend to happen to business inventories, future output, and employment?
b) If the current output rate is $6.5 trillion, what will tend to happen to inventories, future output and employment?
c) What is the equilibrium rate of income/output of Timbuktu economy?
d) If the economy's full employment rate of output is $6.0 trillion, what will happen to the unemployment rate assuming that it will persist into the future?
e) What would happen to the equilibrium level of output/income if there will be an autonomous increase in investment of $250 billion?