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Aggregate Demand and Gross Domestic Product - Coursework Example

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This coursework "Aggregate Demand and Gross Domestic Product" discusses the shortage in finance that was experienced during the recession period that however led to squeezed incomes. In this effect, the money to invest is not available and the consumers did not have confidence in the market situations…

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Aggregate Demand and Gross Domestic Product

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Subject: Macro & Microeconomics
Type: Coursework
Level: Undergraduate
Pages: 1 (250 words)
Downloads: 2
Author: jazmynekuhn

Extract of sample "Aggregate Demand and Gross Domestic Product"

Recession

Change in Aggregate demand:

Change in GDP

(12,883.5- 13,266.8)/ 13,266.8= decrease of 3%

Change in personal consumption expenditures (C)

(9076.0-9289.1)/9289.1 = decline of 2.29%

Change in gross domestic investment (I)

(1,744.6-2,055.7)/ 2,055.7 = decrease of 15.13%

Change in net exports (Xn)

(-478.0--550.2)/ -550.2= 13.12% decrease

Change in Government consumption expenditures (G)
and gross investment

(2,520.5-2,473.9)/ 2,473.9= 1.88% increase

The gross domestic product decreased by 3%. The domestic investment had the largest decrease of 15.13 %.

The investment reduced sharply as they were no disposable income as well as a lack of confidence in doing investment. (Irvin, 2008)

The demand for products was low as well as the supply.

Multiplier

Aggregate demand equals C+I+G+X-M

Change in variable MPC 75%

5% increase in investment

Second-quarter

(10676+ 105% of 1895.3+ -597.1+ 3038.6) *75% =11,330.7

Third-quarter

(10 803 +105% of 1918.1+-572.8+ 3049.8)*0.75 =11,470.5

Export and import each increase by 5%

Second-quarter

[10676+ 1895.3+ (105% of 2085.3 – 105% of 2682.4) + 3038.6] *75% = 11,237.2

Third-quarter

[10 803 + (105% of 2116.9 – 105% of 2689.7) +1918.1+ 3049.8]*0.75 = 11,377.1

5% increase in consumption

Second-quarter

(105% of 10676+ 1895.3+ -597.1+ 3038.6) *75% = 11659.95

Third quarter

(105% of 10 803 + 1918.1+-572.8+ 3049.8)*0.75 = 11,803.7

5% increase in Government spending

Second-quarter

(10676+ 1895.3+ -597.1+105% of 3038.6) *75% = 11,373.5

Third quarter

03 + 1918.1+-572.8+ 105% of 3049.8)*0.75 = 11,512.9

The greatest change in dollars from a to d.

Change in GDP second quarter

a.) 11,330.7 – 15012.8 = -3682.1

b.) 11,237.2 – 15012.8 = -3775.6

c.) 11659.95 – 15012.8 = -3352.85

d.) 11,373.5 – 15012.8 = -3639.3

Third quarter

a.) 11,470.5 – 15198.6 = -3728.1

b.) 11,377.1 – 15198.6 = -3821.5

c.) 11,803.7 – 15198.6 = -3349.9

d.) 11,512.9 – 15198.6 = -3685.7

The change in imports and exports by 5% caused the greatest change in GDP. The second change was $ -3775.6 and the third quarter was $ -3821.5

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