EBK ECONOMICS
13th Edition
ISBN: 8220106799642
Author: PARKIN
Publisher: PEARSON
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Chapter 28, Problem 7SPA
To determine
Identify the real GDP and explain the reason of real GDP increase by more than $5 billion.
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Why are changes in inventories included as part of investment spending? Suppose inventories declined by $1 billion during 2008. How would this affect the size of gross private domestic investment and gross domestic product in 2008? Explain.
Suppose real GDP is $5,361 billion, taxes collected by the government are $528 billion, government spending is $669 billion, and consumption spending is $3,797 billion.
If the economy is closed, what is the value of investment spending?
Enter a whole number with no dollar sign and please do not include the word billion.
A $300 million decrease in investment spending will increase real GDP by more than $300 million. Is this a true statement? What is the relationship between investment spending and the GDP? I think that investment spending goes directly into the economy so I believe the answer to be true. But I am not sure.
Chapter 28 Solutions
EBK ECONOMICS
Ch. 28.1 - Prob. 1RQCh. 28.1 - Prob. 2RQCh. 28.1 - Prob. 3RQCh. 28.2 - Prob. 1RQCh. 28.2 - Prob. 2RQCh. 28.2 - Prob. 3RQCh. 28.2 - Prob. 4RQCh. 28.3 - Prob. 1RQCh. 28.3 - Prob. 2RQCh. 28.3 - Prob. 3RQ
Ch. 28.4 - Prob. 1RQCh. 28.4 - Prob. 2RQCh. 28.4 - Prob. 3RQCh. 28.4 - Prob. 4RQCh. 28 - Prob. 1SPACh. 28 - Prob. 2SPACh. 28 - Prob. 3SPACh. 28 - Prob. 4SPACh. 28 - Prob. 5SPACh. 28 - Prob. 6SPACh. 28 - Prob. 7SPACh. 28 - Prob. 8SPACh. 28 - Prob. 9SPACh. 28 - Prob. 10SPACh. 28 - Prob. 11SPACh. 28 - Prob. 12SPACh. 28 - Prob. 13SPACh. 28 - Prob. 14SPACh. 28 - Prob. 15APACh. 28 - Prob. 16APACh. 28 - Prob. 17APACh. 28 - Prob. 18APACh. 28 - Prob. 19APACh. 28 - Prob. 20APACh. 28 - Prob. 21APACh. 28 - Prob. 22APACh. 28 - Prob. 23APACh. 28 - Prob. 24APACh. 28 - Prob. 25APACh. 28 - Prob. 26APACh. 28 - Prob. 27APACh. 28 - Prob. 28APACh. 28 - Prob. 29APACh. 28 - Prob. 30APACh. 28 - Prob. 31APACh. 28 - Prob. 32APACh. 28 - Prob. 33APACh. 28 - Prob. 34APA
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- The country is experiencing a serious rise in inflation which the government wants to control through fiscal policy. The Government will decrease spending by $20 million and increase taxes by $15 million. The marginal propensity to consume (MPC) is 0.80. What will be the effect on GDP and by how much?arrow_forwardMPC in an economy is 0.8. if investment is increased by dollar 5 million, how much would be increase in income.arrow_forwardAn increase in interest rates increases investment spending and increases consumption spending. decreases investment spending and increases consumption spending. decreases investment spending and decreases consumption spending. increases investment spending and decreases consumption spending.arrow_forward
- In a closed economy, GDP is $1000, government purchases are $200, consumption is $700 and the government has a budget surplus of $25. Using the given information calculate: a) investment, b) taxes, c) public saving.arrow_forwardSolve it correctly pleasearrow_forwardCalculate MPC when a change in investment spending of 40 million leads to an increase in real GDP by 160 million.arrow_forward
- Suppose that business executives are very optimistic, and they raise their investment spending. What happens to the expenditure line? How will this affect real GDP? The expenditure line shifts up and real GDP increases by more than the amount of the shift. The expenditure line shifts up and real GDP decreases, The expenditure line shifts down and real GDP decreases by more than the amount of the shift. The expenditure line shifts down and real GDP increases.arrow_forwardConsider an economy in which GDP is $8.2 trillion, public saving is -$0.2 trillion, taxes are $0.9 trillion, private saving is $3.0 trillion, export is $0.6 trillion, and import is $0.5 trillion. Calculate government purchases. Calculate national saving and investment. Calculate consumption.arrow_forwardThere is an increase in investment of $2000 million in an economy. MPC is given to be as 0. Calculate the total increase in income.arrow_forward
- If in an economy MPC is 0.8 and investment increase by $10 billion. Calculate the increase in income.arrow_forwardIf the MPC is 0.8 and the investment in a country increases by $900 billion calculate the total increase in income?arrow_forwardIn a closed economy, consumers spend $300 regardless of the level of income, and the marginal propensity to consume (MPC) is 0.75. Investment is equal to $200. The government spends $400 and collects $50 in taxes. The equilibrium level of GDP in this economy is $arrow_forward
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