Consider a macroeconomy where the current population is 800 thousand people. Gross domestic private investment is constant $2500 million while consumer expenditure is described by the equation: C = 580 +0.8DI. The government is fairly active, with a total expenditure of $2000 million and net taxes of $2550 million. Further investigation of the macroeconomy reveals that imports are constant at $3000 million while exports are constant at $2500 million. Currently, the overall price level (GDP deflator) is 118 and the potental GDP level is $13.5 billion. (Question 4 of 7) Now, consider that the government decreases taxes by 7.5%. While the change had a direct impact on the economy, other market conditions led to an unanticipated change in the economy. Specifically, imports decrease by 7.5%. At the same time, given the birth rate, mortality rate, and net migration, the economy experienced a 0% change in its population. 1. As a result of these events, what is the current equilibrium level of GDP? (report your answer at 2 decimal places and in million of dollars) 2. what is the current real GDP per capita? 3. what is the value gap?
Consider a macroeconomy where the current population is 800 thousand people. Gross domestic private investment is constant $2500 million while consumer expenditure is described by the equation: C = 580 +0.8DI. The government is fairly active, with a total expenditure of $2000 million and
net taxes of $2550 million. Further investigation of the macroeconomy reveals that imports are constant at $3000 million while exports are constant at $2500 million. Currently, the overall
(Question
4 of 7)
Now, consider that the government decreases taxes by 7.5%. While the change had a direct impact on the economy, other market conditions led to an unanticipated change in the economy. Specifically, imports decrease by 7.5%. At the same time, given the birth rate, mortality rate, and net migration, the economy experienced a 0% change in its population.
1. As a result of these events, what is the current equilibrium level of GDP? (report your answer at 2 decimal places and in million of dollars)
2. what is the current real GDP per capita?
3. what is the value gap?
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