Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134079271
Author: CASE
Publisher: PEARSON
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Question
Chapter 1.A, Problem 2P
To determine
The relationship between the income and consumption.
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Consider an economy that produces and consumes bread and automobiles. In the following table are data for two different years.
Year
2000
2010
Price of an automobile
$40,000
$50,000
Price of a loaf bread
$20
$30
Number of auto-mobiles produced
100 cars
120 cars
Number of loaves of bread produced
600,000 loaves
500,000 loaves
Using the year 2000, compute the following statistics for each year: nominal GDP, real GDP, the implicit price deflator for GDP, and a fixed-weight price index such as CPI.
How much have prices risen between year 2000 and year 2010? Compare answers given by Laspeyres and Passche price indices.
Suppose you are a senior public servant writing a bill to index Social Security and pensions. That is your bill will adjust these benefits to offset changes in the cost of living. Will you use the GDP deflator or the CPI? Explain
emphasis on questions 2 and 3 .
Calculate the four components of expenditure and GDP for the following economy using data from the table below.Instructions: Enter your responses as whole numbers.
GDP
Consumption expenditures
$600
Exports
$75
Government purchases of goods and services
$200
Construction of new homes and apartments
$200
Sales of existing homes and apartments
$200
Imports
$50
Beginning-of-year inventory stocks
$100
End-of-year inventory stocks
$125
Business fixed investment
$100
Government payments to retirees
$100
Household purchases of durable goods
$150
Consumption expenditures: $
Investment expenditures: $
Government Purchases: $Net Exports: $GDP: $
From 2007 to 2009, calculate the percentage change in
(Enter your responses as a percentage rounded to one decimal place. If you are entering any negative numbers be sure to include a negative sign (−) in front of those numbers.)
a. real consumption.
__%
b. real investment.
__ %
c. real government spending.
__ %
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Similar questions
The following table lists GDP per capita from 1970 to 2010 for South Korea and the United States. As you can see, both grew substantially over that 40-year period.
Plot the five data points for each country on a graph using a nonproportional scale, as in Exhibit 7.3 in the chapter. Connect the points to create a line graph.
Plot the five data points for each country on a graph using a proportional scale, that is, a scale where equal distances represent equal percentage changes. Connect the points to create a line graph.
Interpret the differences you see in the two graphs.
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The following table shows data on personal consumption expenditures, gross private domestic investment, exports, imports, and government consumption expenditures and gross investment for the United States in 2007, as published by the Bureau of Economic Analysis. All figures are in billions of dollars.
Fill in the missing cells in the following table to calculate GDP.
Components
Personal Consumption Expenditures (CC)
$9,734.2
Gross Private Domestic Investment (II)
$2,125.4
Exports (XX)
$1,643
Imports (MM)
$2,351
Net exports of goods and services (X−MX−M)
Government Consumption Expenditures and Gross Investment (GG)
$2,689.8
Gross domestic product (GDP)
This method of calculating GDP, which involves summing the , is called the approach.
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Consider an economy that produces and consumes bread and automobiles. In the following table are data for two different years.
Year
2000
2010
Price of an automobile
$40, 000
$50, 000
Price of a loaf bread
$20
$30
Number of ao=utomobiles produced
100 cars
120 cars
Number of loaves of bread produced
600,000 loaves
500, 000 loaves
Using the year 2000, compute the following statistics for each year:
nominal GDP,
real GDP,
the implicit price deflator for GDP,
and a fixed weight price index such as CPI.
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From the information in the table below, calculate the following statistics.
Personal consumption
N1,344
Investment
456
Net nonbusiness interest income
270
Government purchases
480
Profit
406
Employee compensation
1520
Net exports
24
Rents
2
Depreciation
278
Indirect business taxes
156
Corporate retained earnings
249
Net foreign factor income
5
Interest
98
Social Security taxes
150
Transfer payments
300
Personal taxes
214
Statistical discrepancy
0
Gross domestic product b. Gross national product c. Net domestic product
National income e. Personal income f. Disposable personal income
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Calculate the four components of aggregate expenditure and GDP for the following economy using data from the table below.Instructions: Enter your responses as whole numbers. If you are entering any negative numbers, be sure to include a negative (-) sign in front of those numbers.
GDP
Consumption expenditures
$550
Exports
$100
Government purchases of goods and services
$200
Construction of new homes and apartments
$200
Sales of existing homes and apartments
$200
Imports
$50
Beginning-of-year inventory stocks
$100
End-of-year inventory stocks
$50
Business fixed investment
$100
Government payments to retirees
$100
Household purchases of durable goods
$150
Consumption expenditures: $
Investment expenditures: $
Government Purchases: $ Net Exports: $
GDP: $
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Suppose the Following information was published by Australia Bureau of Statistics in 2017:
Item
Amount (AUD billion)
Household consumption (C)
1029.81
Government consumption
340.92
Exports
386.39
Value of cocaine seized at Sydney Airport
10,500
Value of intermediate goods in tractor Manufacturing
52,003
Gross private domestic investment (I)
352.69
Imports
386.95
Components used in the manufactrure of cars
40,000
Gifts
15,236
Government investment
88.19
Value of second-hand goods
500.00
Use the information to answer the following questions
Identify the items that are not included in the GDP calculation.
Calculate Australia’s GDP in 2017.
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Which statement below best supports the correlation (relationship) between energy consumption and a country’s Gross Domestic Product?
Your answer:
1
Countries with a high gross domestic product are low consumers of energy.
2
There is no correlation between energy consumption and gross domestic product.
3
Countries with a high gross domestic product are high consumers of energy
4
Countries with a low gross domestic product are high consumers of energy
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Using the following information. Showing all working and calculate
(i) Personal and disposable income
(ii) Household consumption Expenditure
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Create a graph for the aggregate expenditures (AE) model in Excel using the data from Table 1: A Private Closed Economy.
Table 1 A Private Closed Economy
Real domestic
output (GDP=DI)
(billions)
Consumption
(billions)
Saving
(billions)
Investment
(billions)
Aggregate Expenditures
(billions)
$240
260
280
300
320
340
360
380
400
$244
260
276
292
308
324
340
356
372
$ -4
0
4
8
12
16
20
24
28
$16
16
16
16
16
16
16
16
16
$260
276
292
308
324
340
356
372
388
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23) Refer to Figure 1.5. As income decreases, consumption decreases by a decreasing amount. If consumption is graphed on the vertical axis and income is graphed on the horizontal axis, the relationship between consumption and income would look like which of the following Panels?
A) A
B) B
C) C
D) D
Note:-
Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism.
Answer completely.
You will get up vote for sure.
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Suppose that when the interest rate on loans is 16 percent, businesses find it unprofitable to invest in machinery and equipment. However, when the interest rate is 14 percent, $5 billion worth of investment is profitable. At 12 percent interest, a total of $10 billion of investment is profitable. Similarly, total investment increases by $5 billion for each successive 2-percentagepoint decline in the interest rate. Describe the relevant relationship between the interest rate and investment in a table, on a graph, and as an equation. Put the interest rate on the vertical axis and investment on the horizontal axis. In your equation use the form i = a + bI, where i is the interest rate, a is the vertical intercept, b is the slope of the line (which is negative),and I is the level of investment.
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Assume that the average or mean monthly household consumption expenditure for Malaysia rose from RM3,578 in 2018 to RM4,033 in 2020, growing 6% per annum at nominal value, according to the statistics department. However, in terms of real value — which refers to the constant price using the Consumer Price Index with the base year 2014 as the deflator — annual growth rate is 3.9% for the same period, mentioned on its Household Expenditure Survey Report 2020.
a) Suppose that consumer spending initially rises by RM5 billion for every 1 percent rise in household wealth and that investment spending initially rises by RM20 billion for every 1 percentage point fall in the real interest rate. Also, assume that the economy’s multiplier is 4.
i. If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by two percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level?
ii. In what…
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