Complete Download of Macroeconomics Principles and Policy 13th Edition Baumol Solutions Manual Full Chapters in PDF DOCX
Complete Download of Macroeconomics Principles and Policy 13th Edition Baumol Solutions Manual Full Chapters in PDF DOCX
Complete Download of Macroeconomics Principles and Policy 13th Edition Baumol Solutions Manual Full Chapters in PDF DOCX
https://testbankdeal.com
https://testbankdeal.com/product/macroeconomics-
principles-and-policy-13th-edition-baumol-
solutions-manual/
https://testbankdeal.com/product/macroeconomics-principles-and-
policy-13th-edition-baumol-test-bank/
testbankdeal.com
https://testbankdeal.com/product/microeconomics-principles-and-
policy-13th-edition-baumol-solutions-manual/
testbankdeal.com
https://testbankdeal.com/product/economics-principles-and-policy-13th-
edition-baumol-solutions-manual/
testbankdeal.com
https://testbankdeal.com/product/safe-maternity-and-pediatric-nursing-
care-1st-edition-linnard-palmer-solutions-manual/
testbankdeal.com
Art Past Art Present 6th Edition Wilkins Test Bank
https://testbankdeal.com/product/art-past-art-present-6th-edition-
wilkins-test-bank/
testbankdeal.com
https://testbankdeal.com/product/living-in-the-environment-
canadian-3rd-edition-miller-test-bank/
testbankdeal.com
https://testbankdeal.com/product/concepts-in-federal-
taxation-2015-22nd-edition-murphy-test-bank/
testbankdeal.com
https://testbankdeal.com/product/economics-of-money-banking-and-
financial-markets-the-business-school-5th-edition-mishkin-test-bank/
testbankdeal.com
https://testbankdeal.com/product/police-field-operations-theory-meets-
practice-2nd-edition-birzer-test-bank/
testbankdeal.com
Exercises for Weather and Climate 9th Edition Carbone
Solutions Manual
https://testbankdeal.com/product/exercises-for-weather-and-
climate-9th-edition-carbone-solutions-manual/
testbankdeal.com
Chapter 9/Demand-Side Equilibrium: Unemployment or Inflation?
CHAPTER 9
DEMAND-SIDE EQUILIBRIUM:
UNEMPLOYMENT OR INFLATION?
TEST YOURSELF
1. From the following data, construct an expenditure schedule on a piece of graph
paper. Then use the income-expenditure (45° line) diagram to determine the
equilibrium level of GDP.
Income Consumption Investment Government Net Exports
Purchases
3,600 $3,220 $240 $120 $40
3,700 3,310 240 120 40
3,800 3,400 240 120 40
3,900 3,490 240 120 40
4,000 3,580 240 120 40
Now suppose investment spending rises to $260, and the price level is fixed. By how
much will equilibrium GDP increase? Derive the answer both numerically and
graphically.
FIGURE 1
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 9/Demand-Side Equilibrium: Unemployment or Inflation?
The original equilibrium GDP is at Y = 3,800, where spending equals output. This is
shown by the intersection of the lower of the two expenditure lines in the graph above
with the 45° line. The MPC calculated from the data is 0.90, so the multiplier is 10. If
investment spending rises by $20 (to $260) the equilibrium GDP will increase by $20×10
= $200, which is represented by a vertical shift (by $20) to the upper expenditure function
in the diagram.
In question 2, the marginal propensity to consume is lower than it was in question 1 (0.6
versus 0.9), but in this case there is induced investment (investment which changes as
GDP changes), while in question 1 investment was constant. The two changes cancel
each other, and the expenditure schedule is the same in both questions. So Figure 1
applies to Question 2, and the equilibrium GDP is 3800.
3. Suppose that investment spending is always $250, government purchases are $100,
net exports are always $50, and consumer spending depends on the price level in the
following way:
Price Consumer
Level Spending
90 $740
95 720
100 700
105 680
110 660
On a piece of graph paper, use these data to construct an aggregate demand curve. Why
do you think this example supposes that consumption declines as the price level rises?
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 9/Demand-Side Equilibrium: Unemployment or Inflation?
FIGURE 2
At lower prices, the real value of money and other assets that are denominated in money
terms is higher. Since wealth influences consumption, at lower prices consumption is
higher.
4. (More difficult) Consider an economy in which the consumption function takes the
following simple algebraic form:
C = 300 + 0.75DI
and in which investment (I) is always $900 and net exports are always –$100.
Government purchases are fixed at $1,300 and taxes are fixed at $1,200. Find the
equilibrium level of GDP, and then compare your answer to Table 1 and Figure 2. (Hint:
Remember that disposable income is GDP minus taxes: DI = Y – T = Y – 1,200.)
Y = C + I + G + (X – IM)
C = 300 + 0.75DI
C = 300 + 0.75(Y – 1200)
C = 300 + 0.75Y – 900
C = -600 + 0.75Y
Y = -600 + 0.75Y + 900 + 1300 – 100
Y = 0.75Y + 1500
0.25Y= 1500
Y = (1/0.25) 1500
Y = 4 1500 = 6000
This algebraic model yields the same equilibrium GDP as Table 2. (The solution is also
given in the Appendix.)
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 9/Demand-Side Equilibrium: Unemployment or Inflation?
5. (More difficult) Keep everything the same as in Test Yourself Question 4 except
change investment to I = $1,100. Use the equilibrium condition Y = C + I + G + (X –
IM) to find the equilibrium level of GDP on the demand side. (In working out the
answer, assume the price level is fixed.) Compare your answer to Table 3 and Figure
10. Now compare your answer to the answer to Test Yourself Question 4. What do you
learn about the multiplier?
Y = C + I + G + (X - IM)
C = 300 + 0.75DI
C = 300 + 0.75(Y - 1,200)
C = 300 + 0.75Y - 900
C= -600 + 0.75Y
Y= -600 + 0.75Y + 1,100 + 1,300 - 100
Y = 0.75Y + 1,700
0.25Y = 1,700
Y = 4 × 1,700 = 6,800
This algebraic model yields the same equilibrium GDP as Table 3 and Figure 10 in the
chapter.
Compared to the answer to Test Yourself Question 4, we find $800 more in GDP from a
$200 increase in I. Thus this question demonstrates that the multiplier of 4 applies to
changes in I as well as to changes in C.
C = –680 + 0.8Y
Y = –680 + 0.8Y + 600 + 1100 + 100
Y = 1120 + 0.8Y
0.2Y= 1120
Y = 5(1120) = 5600
7. Use both numerical and graphical methods to find the multiplier effect of the following
shift in the consumption function in an economy in which investment is always $220,
government purchases are always $100, and net exports are always -$40. ( Hint: What
is the marginal propensity to consume?)
Income Consumption Consumption
before Shift after Shift
$1,080 $ 880 $ 920
1,140 920 960
1,200 960 1,000
1,260 1,000 1,040
1,320 1,040 1,080
1,380 1,080 1,120
1,440 1,120 1,160
1,500 1,160 1,200
1,560 1,200 1,240
FIGURE 3
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 9/Demand-Side Equilibrium: Unemployment or Inflation?
The graph above indicates that equilibrium GDP rises from 1,320 to 1,440, or by 120.
The oversimplified multiplier formula can be used in this case. The marginal propensity
to consume can be calculated between any two income levels. The numbers in the table
above show that each $60 of additional income leads to $40 more in consumer spending,
so the MPC is 40/60 = 2/3, and the multiplier is 1/[1 - (2/3)] = 3. So a shift in
consumption of 40 should raise equilibrium GDP by 120, which it does.
DISCUSSION QUESTIONS
1. For more than 30 years, imports have consistently exceeded exports in the U.S.
economy. Many people consider this imbalance to be a major problem. Does this
chapter give you any hints about why? (You may want to discuss this issue with
your instructor. You will learn more about it in later chapters.)
Some problems are created by the trade deficit. Since net exports are a component of
aggregate demand, the trade deficit represents a reduction in aggregate demand. On the
other hand, there are some advantages to the trade deficit. (These features will be
discussed in future chapters. The trade deficit allows U.S. absorption of goods and
services to exceed production. Also, it facilitates the inflow of foreign capital that covers
the shortage of savings that would otherwise be caused by a federal government deficit).
2. Look back at the income-expenditure diagram in Figure 3 and explain why some level
of real GDP other than $6,000 (say, $5,000 or $7,000) is not an equilibrium on the
demand side of the economy. Do not give a mechanical answer to this question.
Explain the economic mechanism involved.
At any level of GDP other than the single equilibrium, total spending differs from the
amount of production. Hence inventories change, and producers have an incentive to
change the level of output.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 9/Demand-Side Equilibrium: Unemployment or Inflation?
3. Does the economy this year seem to have an inflationary gap or a recessionary gap?
(If you do not know the answer from news reports, ask your instructor.)
The answer depends upon the current state of the economy but for the years leading up to
2011, the most appropriate answer would be a recessionary gap.
4. Try to remember where you last spent a dollar. Explain how this dollar will lead to a
multiplier chain of increased income and spending. (Who received the dollar? What
will he or she do with it?)
The answers will, of course, vary. Most students probably spent their last dollar at a retail
store. The money went into the pocket of the proprietor, an employee or a supplier of the
store, who probably spent some portion of it on other goods or services.
3. In each of these cases, how much saving is there in equilibrium? (Hint: Income not
consumed must be saved.) Is saving equal to investment?
Saving is equal to disposable income minus consumption.
In Question 1: S = (Y - T) - C
S = (2,000- 400) - [-150 + 0.75(2000)]
S = 1,600 - (-150 + 1,500)
S = 1,600 - 1,350
S = 250
S is not equal to I.
In Question 2: S = (Y - T) - C
S = (1,400- 400) - [50 + 0.5(1,400)]
S = 1,000 - (50 + 700)
S = 1,000 - 750
S = 250
In Question 2, S is equal to I. The difference is that X and IM are equal in Question 2 but
unequal in Question 1.
0.25Y= 800
Y = (1/0.25) 800
Y = 4 800 = 3200
(d) There is now an inflationary gap of 200.
(a) Y = C + I + G + (X – IM)
C = 100 + 0.8(Y – 500)
C = 100 + 0.8Y – 400
C = –300 + 0.8Y
Y= –300 + 0.8Y + 700 + 500 + 0
Y = 0.8Y + 900
0.2Y = 900
Y = 5 900 = 4,500
(b) S = (Y – T) – C
S = (4,500 – 500) – [–300 + 0.8(4,500)]
S = 4,000 – 3,300 = 700, which is equal to investment, so S = I.
(c) Now X - IM = 100, so the last four lines of 5(a) above are replaced by
Y = –300 + 0.8Y + 700 + 500 + 100
Y = 0.8Y + 1,000
0.2Y = 1,000
Y = (1/0.2) 1000
Y = 5 1,000 = 5,000
S = (Y – T) – C
S = (5,000 – 500) – [–300 + 0.8(5,000)]
S = 4,500 – 3,700 = 800
Now, S is not equal to I.
DISCUSSION QUESTIONS
1. Explain the basic logic behind the multiplier in words. Why does it require b, the
marginal propensity to consume, to be between 0 and 1?
The multiplier works through consumer spending and disposable income. When
autonomous spending in the economy rises, this increases income paid to the factors of
production, such as labor. When labor receives more income, disposable income rises,
and therefore, consumption rises. This fuels more spending and income payments. Since
people consume only a fraction of each additional dollar earned, the multiplier process
eventually stops when the economy reaches its new equilibrium.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Chapter 9/Demand-Side Equilibrium: Unemployment or Inflation?
In order for the multiplier process to work, the marginal propensity to consume must be
greater than 0 and less than 1. If it were equal to zero, then workers would not increase
consumer spending when income rises, so there would be no multiplier effect. If the
marginal propensity to consume were greater than 1, then the multiplier effects would
never stop and the economy would never reach an equilibrium where expenditures equal
income.
In Figure 4, the intersection of the lower expenditure line with the 45-degree line shows
an equilibrium GDP of 4,000.
FIGURE 4
3. Now raise exports to $650 and find the equilibrium again. How large is the multiplier?
In Figure 4, the intersection of the upper expenditure line with the 45° line shows an
equilibrium GDP of 4,500. (The lower expenditure line shows the solution to Test
Yourself Question 2, with a GDP of 4,000.) Exports have risen by 250, and GDP has
risen by 500, so the multiplier is 2.
DISCUSSION QUESTIONS
1. Explain the logic behind the finding that variable imports reduce the numerical value
of the multiplier?
Variable imports imply that consumer spending on imports will change when income
changes. When consumers experience an increase in disposable income, they consume
not only more domestic goods (consumption), but more foreign goods as well (imports).
Consider how an increase in government spending would affect the economy. In a closed
economy without variable imports, consumers would increase consumption spending on
domestic goods because their disposable income rises, leading to a multiplier effect. In
an economy with variable imports, disposable income rises, causing consumers to spend
more on both domestic goods (increasing consumption) and imported goods (reducing
net exports). Within the formula Y = C + I + G + (X – IM), the reduction in net exports
partially offsets the increase in consumption of domestic goods, reducing the multiplier
effects.
© 2016 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part, except for use as permitted in a license
distributed with a certain product or service or otherwise on a password-protected website for classroom use.
Exploring the Variety of Random
Documents with Different Content
GALLERY 83: Edouard Manet, Gare Saint-Lazare,
dated 1873
One of Degas’ own favorite works, this, his last major oil painting,
has a chalky texture reminiscent of the pastels he frequently used.
Studying the strong patterns in Japanese prints as well as the
snapshot effects of photography, this superb draftsman often
designed his paintings with an angled point of view or created an
off-center balance, cutting off figures by the frame edge. With the
increasing abstraction of his late style, Degas here used a black
outline which not only separates the gestures of the dancers but also
accents their red apparel, intensifying the theatrical effect.
GALLERY 85: Paul Cézanne, Still Life, painted c. 1894
Most evident in this painting is the tension between what is, on the
one hand, a rendition of nature and, on the other, Cézanne’s
deliberate organization of the shapes into a rhythm of forms. The
swirls and eddies of the blue drapery are reflected in the curves of
the apples, peppermint bottle, white linen, and carafe. At the same
time, horizontal or vertical lines dominate along the edge of the
table, the molding of the back wall, and the neck of the bottle,
creating a linear grid that offsets and balances the curving lines. The
blue-green tonality, in addition to the geometric patterning, further
demonstrates the artist’s intent to visually organize and unify.
Indeed, for the sake of unity, Cézanne has even distorted the carafe
by swelling it out on one side, pulling it deeper into the folds of the
fabric.
28
20th-Century Art
(Gallery 76 and West Stair Hall)
With the opening of the East Building, the National Gallery will have
increased space for the display of contemporary art.
29
30
Decorative Arts
As objects for daily use, the decorative arts allow a close insight into
cultures of the past. Among its holdings, the National Gallery has an
extensive collection of European furniture, tapestries, and ceramics
from the fifteenth and sixteenth centuries as well as medieval church
vessels and Renaissance jewelry. In addition, there is a fine selection
of eighteenth-century French furniture—including many pieces
signed by cabinetmakers to Louis XV and Louis XVI and, of historic
interest, the writing table used by Queen Marie Antoinette while she
was imprisoned three years during the French Revolution (gallery
55). The Gallery also contains a large collection of Chinese
porcelains, including porcelains from the Ch’ing Dynasty of the
seventeenth and eighteenth centuries.
Until the East Building is completed, only a few selected works can
be placed on exhibition in the galleries.
Prints and Drawings
The collection of prints and drawings at the National Gallery contains
about fifty thousand examples from the fifteenth century to the
present time. Included are drawings by Dürer, Rembrandt, Rubens,
and Blake, as well as a wide range of prints by the major graphic
artists of the Western World. The National Gallery’s collection
incorporates an extremely fine selection of early Northern woodcuts
and engravings and one of the most important groups of eighteenth-
century French prints, drawings, and book illustrations outside of
France. There is also an excellent group of early manuscript
illuminations.
31
Index of American Design
The Index of American Design is a collection of watercolor
renderings of objects of popular art in the United States from before
1700 until about 1900. The renderings represent American ceramics,
furniture, woodcarving, glassware, metalwork, tools and utensils,
textiles, costumes, and other types of American craftsmanship.
There are some seventeen thousand renderings and about five
hundred photographs. These are available for study, by
appointment. The works themselves may be loaned to organizations
for exhibition outside the Gallery.
32
GENERAL INFORMATION
The National Gallery is open to the public every day in the year
except Christmas Day and New Year’s Day. Admission is free at all
times.
HOURS
Regular: Weekdays, 10 a.m. to 5 p.m.; Sundays, 12 noon to 9 p.m.
Summer: During the summer months the regular hours are extended
to 9 p.m. Dates for the beginning and termination of evening hours
are announced on Gallery information boards and in the Gallery’s
monthly Calendar of Events.
CHECKROOMS
Free checking service is provided near the entrances. All parcels,
briefcases, and umbrellas must be checked.
PUBLICATIONS SERVICE
Reproductions and catalogues of the collections are sold in the
publications salesroom on the Ground Floor near the Constitution
Avenue entrance. Books and catalogues, postcards, color
reproductions, framed reproductions, original color slides,
recordings, portfolios, sculpture reproductions (including jewelry),
note folders, and other publications are available.
TOURS
Gallery talks and free tours of the collection are given by the
Education Department.
FILMS
Free films on art are presented on a varying schedule. For further
information on tours, lectures, and films, consult the Gallery’s
Calendar of Events.
CONCERTS
Free concerts are given in the East Garden Court every Sunday
evening at 7 p.m. (with the exception of the summer period from
late June to late September). Concerts are given either by guest
artists or by the National Gallery of Art Orchestra under the direction
of Richard Bales. The programs, with intermission talks or interviews
by the Gallery staff, are broadcast live over WGMS-AM (570) and FM
(103.5). Seats, which are not reserved, are available after 6 p.m.
CALENDAR OF EVENTS
The monthly Calendar of Events listing special exhibitions, lectures,
concerts, and films at the National Gallery of Art will be sent to you
regularly, free of charge, if you fill out an application at either
information desk.
34
EXTENSION SERVICE
A variety of educational materials suitable for schools, colleges, and
libraries can be borrowed from the Gallery. Color slide programs,
with accompanying audio cassettes, texts, and study prints, cover a
wide range of subjects. A number of films, including “Art in the
Western World” and “The American Vision,” are available. All
material is lent free of charge except for return postage. For
information, apply to the office of the Extension Service.
CAFÉ/BUFFET
The café/buffet is open every day of the year except Christmas Day
and New Year’s Day. It is located at the Concourse level and may be
reached from the Main Floor via the East Garden Court and East
Lobby or from the 4th Street Plaza.
SMOKING ROOMS
Two lounges are provided for smoking: the smoking room on the
Ground Floor and the Founder’s Room on the Main Floor near the
Rotunda. Smoking is also permitted in the café/buffet but is strictly
prohibited in all halls and exhibition galleries.
RESTROOMS
Restrooms are located on the Ground Floor, at the top of each
staircase near the Rotunda on the Main Floor, and at the Concourse
level.
FIRST AID
An emergency room, under the supervision of a trained nurse, is
available for first-aid treatment in case of accident or sudden illness.
It is located on the Ground Floor near the entrance to the
Auditorium. The guards will direct visitors to this room on request.
WHEELCHAIRS • STROLLERS
Strollers for small children and wheelchairs are available from the
guards at both entrances without charge. Attendants for pushing
wheelchairs are not available.
TELEPHONES
Pay-station telephone booths are on the Ground Floor near the
stairways, on the Main Floor near the Rotunda, and at the Concourse
level.
GUARD REGULATIONS
The guards are under orders not to permit visitors to touch the
paintings or sculpture under any circumstances. Fountain pens with
fluid ink may not be used in the galleries. Smoking is forbidden in
the exhibition areas.
Board of Trustees 36
The Chief Justice of the United States, Chairman
The Secretary of State
The Secretary of the Treasury
The Secretary of the Smithsonian Institution
Paul Mellon
John Hay Whitney
Franklin D. Murphy
Carlisle H. Humelsine
John R. Stevenson
37
Main Floor
Services
Men’s Room
Women’s Room
Checkroom
Information
Telephone
Elevator and Stairways
To: 1 Ground Floor
4th Street Entrance
To: Concourse
Café/Buffet
Mall Entrance
Ground Floor
Services
Women’s Room
Men’s Room
Checkroom
Information
Telephone
First Aid
Facilities for the Handicapped
Sales Shop
Special Exhibitions
Constitution Avenue Entrance
4th Street Entrance
Auditorium
Elevator and Stairway
To: 2 Main Floor
To: Concourse
Café/Buffet
38
Main Floor
Schools of Painting
Central Italian and Florentine Renaissance
North Italian and Venetian Renaissance
17th and 18th Century Italian
Spanish
Flemish and German
Dutch
17th and 18th Century French
19th Century French
British
American
Special Exhibitions
Sculpture
West Garden Court
Rotunda
East Garden Court
Mall Entrance
Address:
National Gallery of Art
6th Street and Constitution Avenue N.W.
Washington, D.C. 20565
Telephone:
(202) 737-4215
Cable Address:
NATGAL
Pennsylvania Avenue
Constitution Avenue
7th Street
U. S. Capitol
Transcriber’s Notes
Silently corrected a few typos.
Retained publication information from the printed edition: this
eBook is public-domain in the country of publication.
In the text versions only, text in italics is delimited by
_underscores_.
*** END OF THE PROJECT GUTENBERG EBOOK BRIEF GUIDE ***
Updated editions will replace the previous one—the old editions will
be renamed.