Question

Governmental Spending = $17,000,000 Export Spending = $18,000,000 Investment Spending = $22,000,000 Savings - $10,000,000 Consumption Spending = $35,000,000 Import Spending = $29,000,000 Taxes = $16,000,000 Is the Economy stable? O yes; because leakages = injections no; inflation exists because leakages are greater than injections. no; unemployment exists because injections are greater than leakages. Ono; unemployment exists because leakages are greater than injections. no; inflation exists because injections are greater than leakages. Question 28 (3 points) Use the following to answer questions 23 - 28 Governmental Spending = $17,000,000 Export Spending = $18,000,000 Investment Spending=$22,000,000 Savings = $10,000,000 Consumption Spending = $35.000.000 Import Spending = $29,000,000 Taxes $16.000.000 What does disposable income equal? $45,000,000 $35,000,000 $27,000,000 $10,000,000

Answer 1

1. Ans: No, inflation exists because injections are greater than leakages.

Explanation:

Leakages = S + T = 10,000,000 + 16,000,000 = $26,000,000

Injections = G + I = 17,000,000 + 22,000,000 = $39,000,000

Since, injections are greater than leakages, aggregate output will increase leading to increases in general price level which we call as inflation.

28. Ans: $45,000,000

Explanation:

Disposable income = C + S = 35,000,000 + 10,000,000 = $45,000,000