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- An economy’s aggregate demand is specified as follows:C = 300 + 0.8Yd, Investment (Io) = 230, Taxes (T) = 120 + 0.2Y, Government final purchase = 400, Export (X) =240 and Import (M) = 400.i. Find the equilibrium national incomeii. Find the value of the injections in this economyiii. How much withdrawals are when the economy is in equilibriumExplain the effect of national income when price is flexible due to the following situation: a) An increase in the money supply. b) A reduction in government spending. (explain with graphs)Describe the economy's output gap. The economy has A. an inflationary gap of $500 billion B. neither a recessionary gap nor an inflationary gap C. a recessionary gap of $50 billion D. an inflationary gap of $50 billion
- Stagflation is the combination of--------. Select one: a. a recessionary gap and a falling price level b. no recessionary or expansionary gap, but a rising price level c. an expansionary gap and a falling price level d. a recessionary gap and a rising price level30: In a given economy, families save 10% of their salaries; the current annual taxation rate is 25%; arranged speculations are relied upon to be $ 60 billion; and the import / export imbalance is about $ 2.5 billion. Current government consumptions are $ 270 billion every year. The full limit GNP level is $ 1,060 billion. What is the current shortage? What is the full employment shortfall? Look at the two. Is the current financial plan expansionary or on the other hand contractionary? Clarify.You are an economic analyst for the Parliamentary Budget Officer (PBO) and have been charged with the task of coming up with a strategy to increase investment spending in the economy. You have worked closely with Statistics Canada and are therefore aware that the identity used to calculate the country's production is GDP = C + I +G + X - IM Assuming your country does not export or import and all else is equal, you advise the PBO that: a.The budget should be in deficit, and investment by firms will then increase. b.The budget should be in deficit, and programs meant to increase private saving should be imposed. c.The budget should run a deficit, and programs meant to stimulate private spending should be imposed. d.The budget should run a surplus, and programs meant to stimulate private savings should be imposed.
- Use the Keynesian cross Diagram to depict the following:1- An increase in Government purchases [3]2- An Increase in taxes. [3]3- Automatic adjustment towards equilibrium when AE>PE. [4]a. What is the equilibrium rate of real GDP? $ __ billion b. If full-employment real GDP is $800 billion, what problem does this economy have? multiple choice This economy has a recessionary gap. This economy has an inflationary gap. This economy does not have a problem. c. How large is the real GDP gap? $ __ billionConsider an economy described by the following set of equations: c = 120 +0.08Y I = 320 G = 480 X-IM = -80 T = 400 a. Find the actual level of GDP. b. If full employment comes at Y = 1000, would there be a recessionary gap or an inflationary gap? c. What spending changes will be necessary to eliminate this gap? d. What amount of tax changes will be necessary to eliminate this gap? e. What are some policies action that can be taken.
- Which of the following statements about Fiscal Policy is INCORRECT (a) In order to combat inflation, the South African Reserve Bank must apply a contractionary fiscal policy; (b) A contractionary fiscal policy can result in higher levels of unemployment; (c) Expansionary fiscal policy will increase the budget deficit; (d) The application of fiscal policy will have no effect on aggregate supply in the AD‐AS model. If the inflation rate is 6% and Susan receives a 6% increase in income, then, over the year, Susan’s: (a) Real and nominal income both remain unchanged; (b) Real and nominal income both rise; (c) Real income rises but nominal income remains unchanged; (d) Nominal income rises but real income remains unchanged. Given the import function, Z = 300 + 2/3Y, which of the following statements is correct? The marginal propensity to save is 1/3; The induced component is 300; 2/3 is the proportion of any income spent on imports; None of…The amount by which equilibrium real GDP exceeds full-employment GDP is known as (2pts) Question 12 - The amount by which equilibrium real GDP exceeds full-employment GDP is known as stagflation employment. a recessionary gap. an inflationary gapb.Explain the Short Run Aggregate Supply curve and the assumptions that support its shape. List the assumptions, discuss the shape of the SR AS curve and why it takes that shape. Discuss the difference in the shape of the curve at levels below full employment GDP and what you see at levels above full-employment GDP.
