Real aggregateexpenditure, AE(trillions ofdollars)045°Y = AEAE₁Real GDP, Y(trillions ofdollars)How does the economy adjust if the economy is initially at point ?Inventories have risen above their desired level, and firms increase production.Inventories have risen above their desired level, and firms decrease production.Inventories have fallen below their desired level, and firms increase production.Inventories have fallen below their desired level, and firms decrease production.

The equilibrium occurs where the demand and supply forces are equal. The expenditure is key…

Answered: 0 45° Real GDP, Y (trillions of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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On the demand side of GDP, consumption by _____________ is the largest component of GDP, accounting for about two-thirds of the GDP in any year. services businesses households government
Formula for the relationship between the purchasing power of the U.S. dollar and the price level. The purchasing power of the U.S. dollar is ( directly, inversely ) related to the price level: when the consumer price index (CPI) goes up, the value of the dollar goes (down, up ). Higher prices ( increase, decrease) the dollar’s purchasing power because people need (fewer, more ) dollars to obtain specific quantity of goods and services. Value of the dollar ($V) =
7. An increase in the price level results in a(n) because in the quantity of real GDP demanded A) decrease; a higher price level reduces consumption, investment, and net exports. B) increase; a higher price level reduces consumption, investment, and net exports. C) decrease; a higher price level increases consumption, investment, and net exports. D) increase; a higher price level increases consumption, investment, and net exports. 8. The recession of 2007-2009 made many consumers pessimistic about their future incomes. How does this increased pessimism affect the aggregate demand curve? A) This will move the economy up along a stationary aggregate demand curve. B) This will move the economy down along a stationary aggregate demand curve. C) This will shift the aggregate demand curve to the left. D) This will shift the aggregate demand curve to the right.
The following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is $1,800 million. Enter the amount for government purchases.
The following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is $1,540 million. Enter the amount for government purchases. National Income Account Value (Millions of dollars) Government Purchases (GG) Taxes minus Transfer Payments (TT) 455 Consumption (CC) 700 Investment (II) 490 Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table. National Saving (S)National Saving (S) = = (y-t-g, g-t, y-c, y-c-g) = = (C,G,Y,I) $ ______million
U.S. durable goods orders boosted by aircraft The Commerce Department reported that orders for durable goods increased 2.1 percent in July. Orders for Boeing aircraft rebounded. Source: Financial Times, August 26, 2019 Explain the process by which an increase in durable goods orders at a constant price level changes equilibrium expenditure and real GDP. A planned increase in durable goods is an increase in planned investment. When planned investment increases, _______. A. the economy moves production into investment from consumption expenditure, government expenditure on goods and services, and exports. Real GDP decreases B. real GDP cannot change unless the price level also changes C. real GDP increases by an amount equal to the change in investment. Disposable income decreases to make up for the increase in investment so that the economy returns to its long-run equilibrium D. real GDP initially increases by an amount equal to the change in…
Need help with macroeconomic review questions! How do each of the following transactions affect Canada’s GDP? Unless otherwiseindicated, assume that each of the subsequently mentioned people resides in Canada.(d) Hitomi is a Japanese tourist who spends $50,000 on her vacation in Alberta.(e) Ichabod purchases a $12,000 semiconductor, which he uses to create a robot. He then sells the robot for $67,000.(i) Mario spends $10,000 transporting his marijuana to the cannabis shop, where hesells it for $25,000.
If a country's GDP is increasing, it means that: The country's population is growing. The government is spending more money. The country's exports are increasing. The total value of all goods and services produced in the country is increasing. Shund
Assume that, everything else constant, UK households start consuming more goods imported from Germany. Based solely on the direct impact of this change, choose the right option. GDP in the UK is unchanged. GDP in Germany is unchanged. GDP increases in the UK. GDP falls in Germany.
Problem 3: Different GDP Techniques Consider the following mini-economy composed of two firms (Firm 1 and Firm 2). Firm 1 is a farm and grows $4,000 of Wheat. Firm 1 keeps $1,000 of wheat in a silo to sell next year. Firm 1 then sells its remaining $3,000 of wheat directly to Firm 2. Firm 1 uses the $3,000 it receives from Firm 2 to pay $2,000 to its workers, $200 on interest payments in outstanding debts, and $800 in taxes. Firm 2 is a bakery and uses the $3,000 of wheat that it purchases to bake bread and sell it. Firm 2 produces $7,000 of bread, selling $2,000 to the Government and selling $5,000 to private consumers. Firm 2 pays its workers $1,000, pays $1,000 in taxes, and the owner keeps the rest of the money remaining as profits. 13. Calculate GDP for this mini-economy using the value-added approach. What is the contribution of each firm to this total GDP? 14. Calculate GDP for this mini-economy using the expenditure approach. What is the contribution of each firm to this total…

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