Problem Set 1- GDP Due in class, Wed, Jan 16 During 2016, a country's total Income...

Question

Question

Answer 1

Answer #1

Solution:

We are given that a country's total income = $13 billion

Consumption = $9.1 billion; Investment = $3.3 billion; Net exports = -$0.8 billion

We first do the second part to get the required values, to enter them in the circular diagram.

2) At equilibrium, GDP = National income = $13 billion

Government expenditure, G = ?

GDP = Consumption + Government Expenditure + Investment + Net exports

13 = 9.1 + G + 3.3 + (-0.8)

G = 13 - 9.1 - 3.3 + 0.8

G = $1.4 billion

1) Circular flow model:

HouseholdN et Savings Тах.е. mpok ( $0) ncome 16136) Government Other ounhner Syendi inanco Markeb Eeporaks Net oke nms nveme $3.36 b)

Net exports = Exports - Imports, Savings = Investment (at equilibrium)

Answer 2

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