HOUSEHOLDS GOVERNMENTS FACTOR MARKETS GOODS MARKETS X-M REST OF WORLD X-M FIRMS In the above diagram, flow Y was $10 trillion, flow C was $8 trillion, flow I was $3 trillion, and flow (X-M) was -$5 trillion. Calculate government expenditure.
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- Exercise D24 Compare two policies: a tax cut on income or an increase in government spending on roads and bridges. What are both the short-term and long—term impacts of such policies on the economy?Define the term inventories?The following table provides data for an economy in a certa e Consumpticn expenditure Tmports 1000 600 Government 700 purchases of goods and services Construction 500 of new homes and aparchenta Sales of 600 existing homen and apertmenta Exporta 500 Government 200 payments to retirees Household purchases of durable goods Change in inventory 300 100 A Calculate the value of investment spending B. What is the value of government spending C. What is the value of consumer spending D. What is the value of net exports spending E Calculate the value of GDP according to the spending approach
- Potential GDP 450 C+l+G+X-IM) F T 4,000 5,000 6,000 Real GDP (billions of dollars per year) In Figure 11-1, the slope of the expenditures schedule is 0.75, and the govemment wishes to achieve full employment. It should cut spending by 1,000. increase spending by 250. cut taxes by 1,000. cut taxes by 250. increase spending by 1,000. Real ExpenditureIllustrate each of the following situations with a graph showing IS curve: a. An increase in government spending b. An increase in taxesExplain the items of government expenditure in detail?
- Economist Arthur Laffer famously pointed out that, in some cases, income tax revenue can actually go up when tax rates go down. Why might this be the case?The figure shows the flows of expenditure and income on Big Foot Island. In 2016, W was $56 billion; V was $20 billion; U was $15 billion; J was $25 billion; and Z was $2 billion. Calculate total expenditure and total taxes. 1- Total income is $…. billion. 2- Net taxes equal $… billion.The Federal Budget Ask FRED ALFRED I The accompanying graph contains data on U.S. federal government expenditures as a percentage of total GDP. 27.5 25.0 22.5 20.0 17.5 15.0 1950 1960 1970 1980 1990 2000 2010 Source: U.S. Bureau of Economic Analysis a. Approximately how much of GDP was spent by the Federal Government in 2016?
- Use data below to answer the following questions:Consumption expenditures $300 billion, Government purchases $50 billionTaxes $40 billion, Investment $80 billion, Social Security payments $20 billionImports $30 billion, Exports $40 billiona) How much is GDP?b) How much are net exports?c) Social Security payments are government expenses. Should they be included in GDP? Explain.3. Categories of expenditures Darnell and Eleanor Cohen live in Conshohocken, PA. Their son, Jacques, owns his own plumbing business. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Transaction Darnell buys a sweater made in Guatemala. Darnell's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China. Eleanor gets a new video camera made in the United States. The Pennsylvania Department of Transportation, a state administration, fixes potholes along PA highway 23, which feeds into the center of Conshohocken. Jacques buys a new set of tools to use in his plumbing business. с □ I □ G □ X □ M □ □3. Categories of expenditures Darnell and Eleanor Cole live in Conshohocken, PA. Their son, Jacques, owns his own plumbing business. For each of the following transactions that occur in their lives, identify whether it is included in the calculation of U.S. GDP as part of consumption (C), investment (I), government purchases (G), exports (X), or imports (M). Check all that apply. Transaction The Federal Aviation Administration expands the runways at Philadelphia International Airport, which is just a few miles from Darnell and Eleanor's house. Eleanor buys a new BMW, which was assembled in Germany. Darnell's employer assigns him to provide consulting services to an Australian firm that's opening a manufacturing facility in China. Eleanor gets a haircut. Jacques buys a new set of tools to use in his plumbing business. с O I O G X M O O