I have an Economics question but I want to ask it here since more people come to this group...

Question

anonymous · Answer

To calculate the equilibrium GDP given the following information:
C=2,500+0.80Y
I=2,225
G=2,000
NX=-775
I would just add them up and when I get 0.80Y + 5,950, I would set it to zero, subtract 5,950 from both sides and divide by 0.80, right?

anonymous · Answer

@.Sam.

anonymous · Answer

@JuanitaM

anonymous · Answer

@Mertsj

bahrom7893 · Answer

Post the equation for GDP. The data's useless without the equation.

anonymous · Answer

C+I+G+NX

anonymous · Answer

is what im getting browsing the internet

bahrom7893 · Answer

Then just add them

anonymous · Answer

C=2,500+0.80Y
There is a Y ^^^^
I was asking about that.

anonymous · Answer

@satellite73

anonymous · Answer

@mathg8 
@saifoo.khan

anonymous · Answer

im gonna post the question like it is on paper

anonymous · Answer

attachment

anonymous · Answer

i need help with #10 too

saifoo.khan · Answer

Sorry havn't studied eco in my life.

anonymous · Answer

@amistre64

mertsj · Answer

"To solve for the equilibrium value of Y, one has to set Y equal to total expenditures, Z, and solve for Y."
Don't know if that helps or not.

anonymous · Answer

is -7,437.5 the final answer?

mertsj · Answer

I don't know.

anonymous · Answer

so nobody knows how to do any of this? -_-

mertsj · Answer

I got 29750 but i know nothing about it.

mertsj · Answer

Y=2500+.8Y+2225+2000-775  and I solved it for Y.  Have no idea if it makes any sense or not.

anonymous · Answer

thats what i did

anonymous · Answer

i added everything that can be added and got 0.80Y+5950

anonymous · Answer

then i set it equal to zero, subtracted, and then divided

anonymous · Answer

@TuringTest

mertsj · Answer

.2Y=5950
Y=29750

mertsj · Answer

2500+2225+2000-775=5950

anonymous · Answer

its .80Y

mertsj · Answer

1Y-.8Y=.2Y

mertsj · Answer

.8Y is the same as .80Y

anonymous · Answer

where are you getting this 1Y from?

mertsj · Answer

$$\frac{8}{10}=\frac{80}{100}$$

mertsj · Answer

To solve for the equilibrium value of Y, one has to set Y equal to total expenditures, Z, and solve for Y."

mertsj · Answer

So I said Y= all that stuff I added up.

anonymous · Answer

isnt it supposed to be -29750?

mertsj · Answer

$$Y=2500+.80Y+2225+2000-775$$
$$1Y=(2500+2225+2000-775)+.80Y$$
$$1Y=5950+.80Y$$
$$1.00Y-.80Y=5950$$
$$.20Y=5950$$
$$Y=\frac{5950}{.20}$$
$$Y=29750$$

anonymous · Answer

help with #10 in attachment above ^^^^^ ?

mertsj · Answer

Was that one right?

mertsj · Answer

Aggregate expenditure = consumption expenditure + Investment expenditure + Government expenditure+Exports-Imports.

anonymous · Answer

I dont know if it's right. It's not online hw. It's written hw.

anonymous · Answer

so aggregate expenditure would be 29,750 for both and the unplanned change in inventories would be 10,750 and 18,250?

anonymous · Answer

@mertsj

mertsj · Answer

I thought the 29750 was the equilibrium GDP.

anonymous · Answer

the formulas for both look the same

anonymous · Answer

i dont know. im confused.

mertsj · Answer

what is NX in your example?

anonymous · Answer

its all in the attachment above

mertsj · Answer

What does NX stand for?

anonymous · Answer

net exports?

mertsj · Answer

If that is true, why don't you just use the equation for Aggregate Expenditures to find Aggregate Expenditures?  Aggregate expenditure = consumption expenditure + Investment expenditure + Government expenditure+Exports-Imports.

anonymous · Answer

that is what i did, no?

anonymous · Answer

o and the numbers i got above for the unplanned change in inventories should be -10,750 and -18,250... both negatives

mertsj · Answer

Does it turn out to be the same as the Equilibrium GDP?

mertsj · Answer

Seems like that would be reasonable.

anonymous · Answer

yeah

mertsj · Answer

isn't there any way to find out if you are right or wrong?

anonymous · Answer

not really. unless someone else knows how to do all of this.

mertsj · Answer

So what are you going to do with these numbers after you find them?

anonymous · Answer

what do you mean?

anonymous · Answer

???
Its a hw assignment that i have to turn in.

anonymous · Answer

you still there?

mertsj · Answer

yes

mertsj · Answer

I have been looking on the internet and all the equations say that Consumption  is equal to some decimal times disposable income + some constant.  So I wish you would look in your book or whatever you study from and find out exactly what that equation C=2500 +.80Y means.  What does Y represent?

mertsj · Answer

What is the name and author of your book?

anonymous · Answer

R. Glenn Hubbard
Anthony Patrick O'Brien 
Macroeconomics 3rd Edition Pearson

anonymous · Answer

Y stands for GDP I think

anonymous · Answer

Gross Domestic Product

mertsj · Answer

Better look it up and find out for sure.  They are different types of GDP

anonymous · Answer

Just says GDP

mertsj · Answer

Then look up Equilibrium GDP and see what it says about that.  there is probably an example in your book exactly like the one in this example.

anonymous · Answer

It says Aggregate Expenditure = GDP

mertsj · Answer

What does it say about Equilibrium GDP and Potential GDP?

anonymous · Answer

https://elearning.uky.edu/bbcswebdav/pid-1694684-dt-content-rid-7412231_2/courses/ECO202-003-201230/HANDOUT%20CHAPTER%2011.pdf Can you view this?

mertsj · Answer

It asks for a name and password.

anonymous · Answer

IF … THEN … AND …
Aggregate expenditure is 
equal to GDP
inventories are 
unchanged
the economy is in 
macroeconomic equilibrium.
Aggregate expenditure is 
less than GDP inventories rise
GDP and employment 
decrease.
Aggregate expenditure is 
greater than GDP inventories fall
GDP and employment 
increase.

anonymous · Answer

This is the relationship between aggregate expenditures and GDP

mertsj · Answer

So AE is equal to Equilibrium GDP.  Would you agree?

anonymous · Answer

yes

mertsj · Answer

So for number 19 plug in 19000 for Y in the AE equation.  Did you do that/

mertsj · Answer

Then I don't know about the unplanned change in inventory.

anonymous · Answer

the unplanned change in inventory is GDP - Aggregate Expenditure

mertsj · Answer

Oh.  I see.  It is REAL GDP -AE

mertsj · Answer

So calculate AE and subtract from 19000

anonymous · Answer

I did and got -10,750 and -18,250

mertsj · Answer

So you're done?

anonymous · Answer

Yeah. I just wasn't sure I was doing everything correctly.

mertsj · Answer

I'm checking those Unplanned change in inventory figures.

mertsj · Answer

I got -2150 for the first one.

anonymous · Answer

show me what you are calculating on here

mertsj · Answer

AE=2500+.8(19000)+2225+2000-775

mertsj · Answer

Is that what you think?

mertsj · Answer

AE=2500+.8(19000)+2225+2000-775 = 21150
And 19000-21150 = -2150

anonymous · Answer

thats not how i did it...
i used the 29750 i got for GDP (because GDP=Expenditures)
and then i used the formula GDP-Expenditures to get the unplanned change in inventory...
so: new GDP (19,000 and 11,500) - (29,750 for both)

anonymous · Answer

Getting: -10,750 and -18,250

mertsj · Answer

Oh.  Ok.  I'm sure you understand it much better than I do.  I interpreted the problem differently.