Principles of Economics (12th Edition)
12th Edition
ISBN: 9780134078779
Author: Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher: PEARSON
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Question
Chapter 23, Problem 5.3P
Subpart (a):
To determine
MPC.
Subpart (b):
To determine
MPS
Subpart (c):
To determine
Multiplier.
Subpart (d):
To determine
Amount of unplanned investment.
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Use the graph to answer the questions that follow.
a.What is the value of the MPC?b.What is the value of the MPS?c.What is the value of the multiplier?d.What is the amount of unplanned investment at aggregateoutput of 300, 900, and 1,300?
Use the information in the table to answer the following questions. All numbers are in billions of 2012 dollars.
Planned
Investment (1)
Real GDP (Y)
$14,000
$15,000
$16,000
$17,000
$18,000
The equilibrium level of GDP is $
The MPC is
billion.
Consumption (C)
$11,000
$11,750
$12,500
$13,250
$14,000
$1,500
$1,500
$1,500
$1,500
$1,500
(enter your response to two decimal places).
Suppose that net exports increase by $400 billion. Using the multiplier formula, determine the new level of GDP.
A $400 billion increase in net exports leads to a change in spending of $ billion, so the new level of GDP will be
$ billion.
Government
Purchases (G)
$2,500
$2,500
$2,500
$2,500
$2,500
Net Exports
(NX)
- $500
- $500
- $500
- $500
- $500
SHORT ANSWER QUESTIONS
Increase in foreign holdings of assets in the United States
Exports of goods
Imports of services
Statistical discrepancy
Net transfers
Exports of services
Imports of goods
Income payments on investments
Increase in U.S. holdings of assets in foreign countries
Income received on investments
b. the balance of trade
c. the balance on the financial account
$3,288
31. The following are hypothetical data on the U.S. balance of payments. You can assume the balance on
capital account is zero. Use the data to calculate the following (SHOW YOUR WORK)
a. the balance on the current account
d. statistical discrepancy
-$29
1
64
694
-1,520
-444
-3,286
545
12. State how each of the following will affect the relative values of the U.S. dollar and the British pound
(say which currency appreciates and which currency depreciates):
(a) U.S. citizens switch from buying stock in U.S. companies to buying stock in British companies.
(b) The inflation rate in the United States decreases…
Chapter 23 Solutions
Principles of Economics (12th Edition)
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