Assignment 7: Applying the Income-Expenditure Model

This is an assignment for your study group–the study groups are shown on the header bar of this website.

Start from equilibrium in the income-expenditure model.  Draw the graph and identify the equilibrium level of GDP.

Suppose there is an increase in demand for US exports from the rest of the world.  How does that affect total planned expenditure in the US, GDP and employment in the US?

Show graphically and explain the economic reasoning.

Please email me your submission (one per group) by next Tuesday, Nov 21.