When a lower-income economy’s GDP is able to “catch up” with a higher-income economy’s GDP, this behavior is related to an important concept in the study of economic: policy fluctuations divergence convergence
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- When a lower-income economy’s
GDP is able to “catch up” with a higher-income economy’s GDP, this behavior is related to an important concept in the study of economic:
- policy
- fluctuations
- divergence
- convergence
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- Match the term to the definition Occurs when equilibrium GDP is greater than full employment GDP Occurs when equilibrium is less than full employment GDP A. Recessionary GAP B. Inflationary GapWhen the government sector is included in the income-expenditure model, the equation for aggregate income is Group of answer choices Y = C + I + G. Y = C + S + I. Y = C + I. Y = C + S - T.The circular flow of income forms the basis for all models of the macro-economy, and understanding the circular flow process is key to explaining the determination of national income, output and expenditure over time. Fully explain and illustrate the circular flow of income model as well as highlight the causes and consequences of disequilibrium?
- Which of the following methods would best describe a deflationary fiscal policy? Select one: a) Taxes decrease Public spending increases b) Taxes increases Public spending decreases c) Taxes decrease Public spending constant d) Taxes decrease Public sending decreases e) Taxes incraese Public spending increasesConsider a hypothesis economy described by the following equation C=100 I=1200 X-1110 M=200+0.25Y T=250+0.3Y Required 1.Compute the equilibrium level of the national income 2.The level of consumption income after tax and net exports that corresponds to the equilibrium level national incomeIn the above figure, which of the following policies could move the economy to potential GDP? Group of answer choices increasing government expenditures and decreasing taxes decreasing government expenditures and increasing taxes decreasing taxes and not changing government expenditures increasing government expenditures and not changing taxes
- Assume an economy has a consumption function of C = 0.60 (Yd) + $856.02. Additionally, this economy has investment spending = $421.91, government purchases = $224.77, taxes = $192.45, exports = $193.13, and imports = $249.19. What is the equilibrium level of GDP based on this information? Round your answer to two digits after the decimal.Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300 million with the proportion of an increase in income that is spent on consumption is 0.5. An induced tax of 20% is imposed by the country. The amount of investment is RM250 million, and the amount of government spending is RM150 million. Explain what would happen to the national income equilibrium if the investment changes by RM100 million.After government is added to the income-expenditure model, the formula for the aggregate consumption function is Group of answer choices C = a - b(T - Y). C = a + b(Y + T). C = a - b(Y - T). C = a + b(Y - T).
- Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300 million with the proportion of an increase in income that is spent on consumption is 0.5. An induced tax of 20% is imposed by the country. The amount of investment is RM250 million, and the amount of government spending is RM150 million. (iii) Explain what would happen to the national income equilibrium if the investment changes by RM100 million.given a particular aggregate expenditure function , which of the following must be true if the prevailing level of income is greater than planned aggregateDuring the 2012 fiscal year, households in an economy spent 80 per cent of their disposable income on consumption as well as GH¢300 consumption expenditure which is independent of income. Total government expenditure which stood at GH¢800 was supposed to be financed from a proportional tax levy of 50 per cent of national income and a VAT of GH¢100. Total private investment spending was made up of GH¢400 whereas export was GH¢400 and anautonomous import of GH¢500. Also, marginal propensity to import was 0.15 Determine the equilibrium national income for this economy.
