Congratulations again. You've just been appointed economic adviser to the president of Examland. The mpe is 0.8; autonomous investment is $1,100; autonomous government spending is $8,100; autonomous consumption is $9,000; and autonomous net exports are $900. Instructions: Enter your response rounded to the nearest whole number. a. What is the equilibrium level of income in the country? Level of income: S b. Autonomous net exports increase by $1,500. What will happen to income? Incomerises by S C. You've just leamed the mpe changed from 0.8 to 0.6. How will this information change your answers in a and b? Instructions: Enter your response rounded to the nearest whole number. Level of income: S Income drops

Explanation:

(a)

mpe = 0.8

Autonomous investment = $1,100

Autonomous government spending = $8,100

Autonomous consumption = $9,000

Autonomous net exports = $900

At equilibrium,

Y = Autonomous consumption + [mpe * Y] + Autonomous government spending + Autonomous investment + Autonomous net exports

Y = 9000 + 0.8Y + 8100 + 1100 + 900

Y = 0.8Y + 19100

Y - 0.8Y = 19100

0.2Y = 19100

Y = 19100/0.2 = 95500

The level of income is $95,500.

(b)

Now, autonomous exports increases by $1,500.

mpe = 0.8

Autonomous investment = $1,100

Autonomous government spending = $8,100

Autonomous consumption = $9,000

At equilibrium,

Y = Autonomous consumption + [mpe * Y] + Autonomous government spending + Autonomous investment + Autonomous net exports

Y = 9000 + 0.8Y + 8100 + 1100 + 2,400

Y = 0.8Y + 20600

Y - 0.8Y = 20600

0.2Y = 20600

Y = 20600/0.2 = 103000

Thus,

The income rises by $7,500.

(c)

Now, mpe decreased from 0.8 to 0.6

mpe = 0.6

Autonomous investment = $1,100

Autonomous government spending = $8,100

Autonomous consumption = $9,000

Autonomous net exports = $900

At equilibrium,

Y = Autonomous consumption + [mpe * Y] + Autonomous government spending + Autonomous investment + Autonomous net exports

Y = 9000 + 0.6Y + 8100 + 1100 + 900

Y = 0.6Y + 19100

Y - 0.6Y = 19100

0.4Y = 19100

Y = 19100/0.4 = $47,750

The level of income is $47,750.

Now, autonomous exports increases by $1,500.

mpe = 0.6

Autonomous investment = $1,100

Autonomous government spending = $8,100

Autonomous consumption = $9,000

At equilibrium,

Y = Autonomous consumption + [mpe * Y] + Autonomous government spending + Autonomous investment + Autonomous net exports

Y = 9000 + 0.6Y + 8100 + 1100 + 2400

Y = 0.6Y + 20600

Y - 0.6Y = 20600

0.4Y = 20600

Y = 20600/0.4 = 51500

Thus,

The income rises by $3,750.

a manufacturer of printed circuit boards uses exponential smoothing with trend to forecast monthly demand of its product. at the end of december, the company wishes to forecast sales for january. the estimate of trend through november has been 200 additional boards sold per month. average sales have been around 1000 units per month. the demand for december was 1100 units. the company uses α = 0.20 and β = 0.10. make a forecast including trend for the month of january.