The data in columns 1 and 2 in the table below are for a private closed economy. (1) Real Domestic Output (GDP = DI), Billions (2) Aggregate Expenditures, Private Closed Economy, Billions (3) Exports, Billions (4) Imports, Billions (5) Net Exports, Billions (6) Aggregate Expenditures, Private Open Economy, Billions $300 $340 $20 $30 350 380 20 30 400 420 20 30 450 460 20 30 500 500 20 30 550 540 20 30 600 580 20 30 650 620 20 30 a. Use columns 1 and 2 to determine the equilibrium GDP for this hypothetical economy. $____billion b. Now open up this economy to international trade by including the export and import figures of columns 3 and 4. Fill in the gray-shaded cells in columns 5 and 6. What is the equilibrium GDP for the open economy? $_ billion What is the change in equilibrium GDP caused by the addition of net exports? $_billion 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? Fill in the gray-shaded cells. (1) Real Domestic Output (GDP = DI), Billions (2) Aggregate Expenditures, Private Closed Economy, Billions (3) Exports, Billions (4) Imports, Billions (5) Net Exports, Billions (6) Aggregate Expenditures, Open Economy, Billions $300 $340 $20 $40 350 380 20 40 400 420 20 40 450 460 20 40 500 500 20 40 550 540 20 40 600 580 20 40 650 620 20 40 Net exports = $billion Equilibrium GDP = $_____billion d. What is the multiplier in this example?

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 table below are for a private closed economy.

(1) Real Domestic Output (GDP = DI), Billions	(2) Aggregate Expenditures, Private Closed Economy, Billions	(3) Exports, Billions	(4) Imports, Billions	(5) Net Exports, Billions	(6) Aggregate Expenditures, Private Open Economy, Billions
$300	$340	$20	$30
350	380	20	30
400	420	20	30
450	460	20	30
500	500	20	30
550	540	20	30
600	580	20	30
650	620	20	30

a. Use columns 1 and 2 to determine the equilibrium GDP for this hypothetical economy.

$________billion

b. Now open up this economy to international trade by including the export and import figures of columns 3 and 4. Fill in the gray-shaded cells in columns 5 and 6.

What is the equilibrium GDP for the open economy?

$_______ billion

What is the change in equilibrium GDP caused by the addition of net exports?

$_______billion

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? Fill in the gray-shaded cells.

(1) Real Domestic Output (GDP = DI), Billions	(2) Aggregate Expenditures, Private Closed Economy, Billions	(3) Exports, Billions	(4) Imports, Billions	(5) Net Exports, Billions	(6) Aggregate Expenditures, Open Economy, Billions
$300	$340	$20	$40
350	380	20	40
400	420	20	40
450	460	20	40
500	500	20	40
550	540	20	40
600	580	20	40
650	620	20	40

Net exports = $______billion

Equilibrium GDP = $_______billion

d. What is the multiplier in this example?

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