During 2019, a country reported that its real GDP increased by $3.0 billion. The multiplier for this economy is known to be equal to 10.Which of the following might have caused the increase in real GDP? Question 12Answer a. Exports increased by $0.3 billion. b. Investment decreased by $0.3 billion. c. Exports decreased by $0.3 billion. d. Imports increased by $0.3 billion. e. Government expenditure on goods and services increased by $3 billion.
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Which of the following might have caused the increase in real GDP?
Question 12Answer
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- Exercise 4. Imports and the multiplier. The consumption multiplier tries to capture the idea that individuals increase their consumption expenditures when their income increases, even when it is only a short-term increase and their life time income didn't change. However, individuals not only consume domestic products but also, they import part of their consumption. Therefore, if domestic consumption reacts to changes in current income, then it is natural to think that consumption of foreign goods should increase as well. For example, when the economy is booming, imports usually rise. To incorporate this channel into the model, suppose the import equation is given by Mt =āmīt + xm Ỹt Ỹt are described by equations in the previous exercise It = āƒŸt — b(R₁ − ñ) Yt, Ct =ācīt + x Ỹt Ỹt. The other categories of expenditures follow the same rules as in class. a) Derive the IS curve for this new specification. b) What is the economic explanation for why the parameter xm shows up in the…16. Find consumption expenditure from the following National Income =Rs. 5000 Autonomous Consumption = Rs. 1000 Marginal Propensity to Consume = 0.8 %3DIf GDP is $3,400 billion, the multiplier is 5, and I rises by 15, what is the new level of GDP? The new level of GDP is $ billion.
- Classify each of the following items as a final good or service or an intermediate good or service, and identify which is a component of consumption expenditure, investment, or government expenditure on goods and services. A. A new limousine for the president B. A DVD bought by a household C. Steel sheets bought by General Motors D. A new apartment building O 1. Ais a final good that is government expenditure, B is a final good that is consumption expenditure, C is an intermediate good, and D is a final good that is investment. O 2. A is an intermediate good, B is a final good that is investment, C is an intermediate good, and D is a final good that is investment. O 3. Ais a final good that is government expenditure, B is a final good that is consumption expenditure, Cis a final good that is consumption expenditure, and D is a final good that is consumption expenditure. O 4. Ais an intermediate good, B is a final good that is consumption expenditure, C is an intermediate good, and D is…17. If the MPC were equal to zero, the expenditure multiplier would be * a. Less than zero b. zero c. between zero and one d. one e. greater than oneIf GDP is 3,900, the multiplier is 8, and G falls by 10, what is the new level of GDP? New GDP is $ billion.
- based on macroeconomic theory, one of the following four answers is a correct description of the concept, “expenditure multiplier”. Which one? A/ It is the idea that decreasing national income affects the equilibrium level of GDP by the same amount of that decrease in income. B/ It is the concept that increasing national income affects the equilibrium level of GDP on par with the amount of increased income. C/ The expenditure multiplier is the idea that a given change in spending leads to an equal change in the equilibrium level of GDP. D/ It is the concept that an increase in spending causes a more than proportionate change in GDP.1.If the real GDP is 1000 and Investment is 150, Government Spending is 250 and Net Exports equals -100, then Consumption must be?13. а The accompanying table shows gross domestic product (GDP), disposable income (YD), con- sumer spending (C), and planned investment spending (Iplanned) in an economy. Assume there is no government or foreign sector in this economy. Complete the table by calculating planned aggre- gate spending (AEplanned) and unplanned inven- tory investment (IUnplanned). GDP YD C IPlanned AEPlanned Unplanned (billions of dollars) $0 $0 $100 $300 400 400 400 300 800 800 700 300 1,200 1,200 1,000 300 300 1,600 1,600 1,300 300 ? 2,000 2,000 1,600 300 2,400 2,400 1,900 300 2,800 2,800 2,200 300 3,200 3,200 2,500 b. What is the aggregate consumption function? c. What is Y*, income-expenditure equilibrium GDP?
- 3. If the current equilibrium GDP value is $925,000 and investment spending decreases by $25,000 with an MPC of 0.8, solve for the new equilibrium GDP.SHORT ANSWER QUESTIONS Increase in foreign holdings of assets in the United States Exports of goods Imports of services Statistical discrepancy Net transfers Exports of services Imports of goods Income payments on investments Increase in U.S. holdings of assets in foreign countries Income received on investments b. the balance of trade c. the balance on the financial account $3,288 31. The following are hypothetical data on the U.S. balance of payments. You can assume the balance on capital account is zero. Use the data to calculate the following (SHOW YOUR WORK) a. the balance on the current account d. statistical discrepancy -$29 1 64 694 -1,520 -444 -3,286 545 12. State how each of the following will affect the relative values of the U.S. dollar and the British pound (say which currency appreciates and which currency depreciates): (a) U.S. citizens switch from buying stock in U.S. companies to buying stock in British companies. (b) The inflation rate in the United States decreases…1. Country X has following data: C = 20 + 0.8Y4, I = 30, G = 40, Tx = 20, T, = 15, X = 60, M = 20 + 0.04Y, incoming year growth target is 600, All figures is billion. Please calculate: a. National income equilibrium! b. Consumption and saving equilibrium! c. Government income from tax! d. How much change in government consumption if they want to achieve growth target?