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 24, Problem 1.2P
Subpart (a):
To determine
Subpart (b):
To determine
Subpart (c):
To determine
Effect of cutting government purchases in the economy.
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Question 31
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In year 2018, the government of Qatar spent is 143 billion Qatari Riyal (the national currency of Qatar). The GDP of Qatar in the same year is 1,121 billion Qatari Riyal. Qatar's desired
consumption and desired investment during the year can be summarized by the following equations:
cd
= 1,000 – 5,000r,
||
/d = 800 – 3000r,
%3D
cd
is the desired consumption in billions of Qatari Riyal, 7º if the desired investment in billions of Qatari Riyal, and r is the real interest rate in decimal form.
where
What is the equilibrium real interest rate, r*, in %? Round your answer to at least 2 decimal places. (E.g. 12.3456% should be entered as 12.35)
The gross domestic product (GDP) of Country
A is $2 trillion in year 1. What value of
investment will increase its GDP to $4.5trillion
in year 2? (present your result in the nearest
billion dollars, i.e., no decimal places)
Assume that the average disposable income
and consumption (in real $) of this country's
citizen are provided in the table below.
Year Income Consumption
1
60,000
50,000
64,726
51,259
Only typed answer
Chapter 24 Solutions
Principles of Economics (12th Edition)
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- D7arrow_forwardUsing quarterly data from 1947 to the present, graph residential fixed investment relative to GDP a. Compare the graph of residential investment relative to GDP to a graph of the civilian unemployment rate. What happens to residential investment during recessions? In this respect, is residential investment similar to or different from other types of investment? b. During the two decades after World War II, there was an upsurge in population growth and household formation known as the “baby boom.” The baby boom was followed by a “baby bust” during which population growth slowed. How are these demographic trends connected to the behavior of residential investment relative to GDP shown in your graph?arrow_forward1.11 If desired investment exceeds actual investment, then... a) The economy is in a recession. b) Inventories are less than the desired level. c) Inventories are accumulating beyond the desired levels. d) Cyclical unemployment exists. 1.12 Read the following extract and answer the question that follows. Women's empowerment movement eyes 40% of government spending accreditation ..Last year the South African government affirmed its support for women-owned businesses as part of its commitment to ensuring that gender equality in Africa's most advanced economy was achieved. President Cyril Ramaphosa said then: “We are going to drive women's economic inclusion through public procurement. We have set the target of ensuring that 40% of goods and services procured by public entities are procured from women-owned business." Source: https://www.news24.com/citypress/news/womens-empowerment-movement-eyes-40-of-government- spending-20210819 Accessed: 23/08/21 The above decision by the South African…arrow_forward
- Consider an economy described by the following equations:Y=C + I +GY=7,000G=4000T=2,000C=150+0.75(Y-T)I=1,000-50rb. Calculate the equilibrium interest rate. c. Now suppose the G rises by 1,000. Compute private saving, public saving, andnational saving.d. Calculate the new equilibrium interest rate.For these 3 questions please only show the graphical response.arrow_forwardn year 2018, the government of Qatar spent is 143 billion Qatari Riyal (the national currency of Qatar). The GDP of Qatar in the same year is 1,121 billion Qatari Riyal. Qatar's desired consumption and desired investment during the year can be summarized by the following equations: Cd=1,000-5,000r Id=800-3000r Where Cd is the desired consumption in billions of Qatari Riyal, Id if the desired investment in billions of Qatari Riyal, and r is the real interest rate in decimal form. What is the equilibrium real interest rate r* in %? round to at least 2 decimal placesarrow_forward3arrow_forward
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