Suppose that every additional 3 percentage points in the investment rate boosts GDP growth by 1 percentage p Assume also that all investment must be financed with consumer saving. Note: Investment rate = Investment/GDP The economy is currently characterized by Consumption: $7 trillion Saving (= Investment): $2 trillion = GDP: $9 trillion If the goal is to raise the growth rate by 2 percentage points, a. by how much must investment increase? b. by how much must consumption decline? BILLIONS BILLIONS

Suppose that every additional 3 percentage points in the investment rate boosts GDP growth by 1 percentage p Assume also that all investment must be financed with consumer saving. Note: Investment rate = Investment/GDP The economy is currently characterized by Consumption: $7 trillion Saving (= Investment): $2 trillion = GDP: $9 trillion If the goal is to raise the growth rate by 2 percentage points, a. by how much must investment increase? b. by how much must consumption decline? BILLIONS BILLIONS

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1. Consumption = 13,309 Exports = 2,316 Government purchases = 3,331 Saving = 6,607 Government budget deficit = 4,000 Imports = 2.883 %3D a. What is gross domestic product? GDP = b. What is investment? c. What is disposable income? Yd =. d. What is the level of government transfers minus taxes?
1. Investment is a determining factor of GDP. A decrease in the supply of available funds (i.e. a decrease in the supply of savings) is predicted to? a. Decrease interest rates, decrease investment towards physical capital and hence decrease GDP. b. Increase interest rates, increase investment towards physical capital and hence decrease GDP. c. Decrease interest rates, decrease investment towards physical capital and hence increase GDP. d. Increase interest rates, decrease investment towards physical capital and hence decrease GDP.
The following national accounting data are available for an economy for 2020. GDP Household Consumption Government Consumption Government Investment Direct and Indirect Taxes Subsidies by government Government Transfer Payments Government Interest Payments Retained Earnings Net Exports What is the level of national saving in this economy? Select one: a. 190 b. 150 c. 200 d. 250 e. 210 $ Billion 950 650 150 0 170 20 30 10 0 0
Which of the following can cause planned investment by firms to increase? a. To reduce constant budget deficits, the government announces plans to increase the corporate tax rate. b. An increase in the interest rate due to an increase in the cost of making financial transactions. c. Firms become optimistic about economic conditions after seeing reports of strong growth in consumer spending. d. A major recession has reduced consumption spending, hurting profit levels for high-end car manufacturers.
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Would like all parts answered please; specifically parts (d,e,f)
4. Assume that the economy is described by the following equations: Y=C+l+G, Y=8490, G-2719, T-2056, C-258+ 1/2(Y-T), I-400 + 40r. Private saving and the equilibrium interest rate are O Private saving: 2959; The interest rate: 47.4 O Private saving: 2296; The interest rate: 23.7 O Private saving: 2296; The interest rate: 47.4 O Private saving: 2959; The interest rate: 23.7
Using the law of motion for physical capital accumulation (K), what is the amount of capital for the next period if the amount of physical capital today is 20 and Investment is 15 (Assume a depreciation rate of 10%) a) 23 b) 33 c) 34 d) 35 3- Using the law of motion for physical capital accumulation (K), what is the steady state level of capital when investment is 10? (Assume a depreciation rate of 10% and remember that physical capital is constant at the steady state) a) 100 b) 50 c) 120 d) 123 4- What is the key difference between catching up growth and cutting edge growth? a) Cutting edge growth is based on capital accumulation while catching up growth is based on technological advances b) Cutting edge growth is based exclusively on natural resources unique to every country c) Cutting edge growth is based on innovation, new ideas. Catching up growth is based on physical capital accumulation d) None of the above
Suppose GDP is $800 billion, taxes are $150 billion, private saving is $50 billion, and public saving is $20 billion. Assuming this economy is closed, calculate consumption, government purchases, national saving, and investment.
Calculate the value of savings when it's given that:- National income = $1000 million MPS = 0.25 Autonomous consumption expenditure = $200 million
a. If national saving of a closed economy equals$100,000, net taxes equal$125,000,GDPdeflator is 175 and government expenditure equals$45,000, what is private saving?
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