Consumption expenditure is 15,000, government purchases are ...

[fox]

Consumption expenditure is 15,000, government purchases are 5,000, planned investment spending is 4,000 and net exports are 1,500. If total output is 25,000, then unplanned inventory investment is ________.
 
  A) negative 500
  B) 2,500
  C) 3,500
  D) 4,000
  E) negative 450

Question 2

What were the three shocks that the U.S. economy experienced during 2007-2009, and how did these shocks affect the IS curve, the MP curve, and the Phillips curve?
 
  What will be an ideal response?

[joechoochoy]

Answer to Question 1

A

Answer to Question 2

1. The U.S. economy experienced a financial crisis during this period, which increased the risk premium investors required before making loans. This resulted in an upward shift of the MP curve.
2. The U.S. economy experienced a real estate shock during this period, which reduced consumer wealth and residential construction. This resulted in a leftward shift if the IS curve.
3. The U.S. economy experienced a surge in oil prices during this period. This resulted in a leftward shift of the IS curve and an upward shift of the Phillips curve.