(1) (2) Aggregate Expenditures, Private Closed Economy, (6) Aggregate Expenditures, Private Open Economy, Real Domestic (5) Output (GDP = DI), (3) Exports, (4) Imports, Net Exports, Billions Billions Billions Billions Billions Billions $200 $240 $20 $30 $ $ 250 280 20 30 300 320 20 30 350 360 20 30 400 400 20 30 450 440 20 30 500 480 20 30 550 520 20 30

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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The data in columns 1 and 2 in the accompanying table are for a private closed economy:
a. Use columns 1 and 2 to determine the equilibrium GDP for this hypothetical economy. b. Now open up this economy to international trade by including the export and import figures of columns 3 and 4. Fill in columns 5 and 6 and determine the equilibrium GDP for the open economy. Explain why this equilibrium GDP differs from that of the closed economy.
c. Given the original $20 billion level of exports, what would be net exports and the equilibrium GDP if imports were $10 billion greater at each level of GDP?
d. What is the multiplier in this example?

(1)
(2)
Aggregate
Expenditures, Private
Closed Economy,
(6)
Aggregate
Expenditures, Private
Open Economy,
Real Domestic
(5)
Output
(GDP = DI),
(3)
Exports,
(4)
Imports,
Net
Exports,
Billions
Billions
Billions
Billions
Billions
Billions
$200
$240
$20
$30
$
$
250
280
20
30
300
320
20
30
350
360
20
30
400
400
20
30
450
440
20
30
500
480
20
30
550
520
20
30
Transcribed Image Text:(1) (2) Aggregate Expenditures, Private Closed Economy, (6) Aggregate Expenditures, Private Open Economy, Real Domestic (5) Output (GDP = DI), (3) Exports, (4) Imports, Net Exports, Billions Billions Billions Billions Billions Billions $200 $240 $20 $30 $ $ 250 280 20 30 300 320 20 30 350 360 20 30 400 400 20 30 450 440 20 30 500 480 20 30 550 520 20 30
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