a)
To compute: The equilibrium
a)
Answer to Problem 3TY
The equilibrium GDP has been derived as
Explanation of Solution
The monetary value of finished goods and services, being produced in a particular time frame, in an economy, is called the Gross Domestic Product or GDP.
The GDP is calculated as follows:
Where
By substituting the values in Eq (1), the equilibrium level of GDP can be calculated:
As the rate of interest is 8 percent and
Simplifying further by bringing the variable on to the left hand side:
Thus the equilibrium level of GDP has been derived as
When the total collected tax is greater than the expenditure by Government, then that budget is said to be surplus budget, and when the Governmental expenditures are more than the collected tax, then that budget is called a deficit budget. Therefore:
Surplus Budget
Deficit Budget
Wherein
Since it is negative value at
When the net export is positive it is called as a trade surplus and when it is negative it is called as a trade deficit. Following is the equation:
Since it is a negative value at
b)
The equilibrium GDP, the budget surplus or deficit and the trade surplus or deficit, as per the data given.
b)
Answer to Problem 3TY
The equilibrium GDP has been derived as
Explanation of Solution
The monetary value of finished goods and services, being produced in a particular time frame, in an economy, is called the Gross Domestic Product or GDP.
The GDP is calculated as follows:
Where
By substituting the values in Eq (1), the equilibrium level of GDP can be calculated:
As the rate of interest is 8 percent and
Simplifying further by bringing the variable on to the left hand side:
Thus the equilibrium level of GDP has been derived as
When the total collected tax is greater than the expenditure by Government, then that budget is said to be surplus budget, and when the Governmental expenditures are more than the collected tax, then that budget is called a deficit budget. Therefore:
Surplus Budget
Deficit Budget
Wherein
Since it is negative value at
When the net export is positive it is called as a trade surplus and when it is negative it is called as a trade deficit. Following is the equation:
Since it is a negative value at
Want to see more full solutions like this?
Chapter 20 Solutions
MACROECONOMICS (LOOSELEAF)-PACKAGE
- Suppose that the following equations describe the economy of the country of the Philippines.C= 500 + 0.8 (Y – T), I= 200, G= 300, NX= 50, T= 200, Yf= 5000; where C=consumption level, I=investment, G=government expenditures, NX=net exports, T=taxes and Yf=full employment output/income.Use this information to find each of the following:4.1. Investment, government and tax multiplier.4.2. Equilibrium output/income.4.3. The output gap.4.4. By how much would government expenditures have to change to eliminate the output gap?arrow_forwardWhen a U.S. consumer buys Canadian maple syrup at the grocery store, this purchase is:A) an importB) an exportC) gross domestic productD) a transfer payment. Below is economic data for Germany for 2016 (measured in billions of current euros). What was total spending? Consumption 1,649.79 Investment 636.42 Government spending 620.01 Exports 1,442.41 Imports 1,211.64 A) 2,675B) 4,348C) 2,906D) 3,137 Please ans both questions and you will get thumbs up.arrow_forwardThe table below shows nominal GDP, exports, and imports for the United States. Nominal GDP, Exports, and Imports Year 2015 2016 Nominal GDP Exports Imports (billions of (billions of (billions of dollars) $2,308.0 2,334.1 LA dollars) $16,981.9 17,601.1 Instructions: Round your answers to one decimal place. If you are entering a negative number include a minus sign. a. Calculate the value of net exports in 2015. billion b. Calculate the value of net exports in 2016. billion dollars) $2,759.7 2,878.3arrow_forward
- Use the following table to answer the question below for an economy that has no government, no international trade or any association with other countries: Consumption (billions) Level of Output (billions) $240 $260 $280 $300 $320 $340 $360 $340 $380 $356 $400 $372 If gross investment is $4 billion, the equilibrium level of GDP (output) will be: a) $340 b) $280 Oc) $260 $244 $260 $276 $292 $308 $324 d) $360arrow_forwardConsider the following hypothetical data for the U.S. economy in 2018 (all amounts are in trillions of dollars; see pages 179–182).Consumption 11.0 Indirect business taxes .8 Depreciation 1.3 Government spending 3.8 Imports 2.7 Gross private domestic investment 4.0 Exports 2.5e. Based on the data, what is GDP? NDP? NI?f. Suppose that in 2019, exports fall to $2.3 trillion, imports rise to $2.85 trillion, and gross private domestic investment falls to $3.25 trillion. What will GDP be in 2019, assuming that other values do not change between 2018 and 2019?arrow_forwardTable 11-6 Government Real GDP Consumption Investment Purchases 1 Net Exports $1,000 $1,000 $100 $150 -$50 2 3 2,000 1,900 100 150 -50 3,000 2,800 100 150 -50 4 4,000 3,700 100 150 -50 Using the table above, answer the following question. The numbers in the table are in billions of dollars. 13) Refer to Table 11-6. What is the value of MPC? A) 0.2 B) 0.5 C) 0.75 D0.9 E) None of the abovearrow_forward
- Q3 In a simple macroeconomic model, the value of national income Y may be found by solving the system: G= 250 (government expenditure) T= 50 (taxation) I= 100 (planned investment) C = 0.75Yd + 150 (consumption) where disposable income Yd = Y – T. (a) Calculate the equilibrium level of national income. (b) Calculate the total increase in government expenditure and investment needed to increase the equilibrium level of national income by 20.arrow_forwardFor this problem, assume exports equal zero and that firms did not purchase any plant or equipment in the years specified. Suppose in the year 2015, firms in this this country produced 4,000 million widgets, all of which they planned on selling. (In other words, firms were not planning on any changes to their inventories.) Of those 4,000 million widgets, households purchased 3,000 million, and government purchased 750 million. In 2015, what was the relationship between actual expenditures and the amount of output (widgets) produced? All else equal, what will firms likely do in the following year?arrow_forwardSaving and investment in the national income accounts The following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is $950 million. Enter the amount for investment. National Income Account Value (Millions of dollars) Government Purchases (G�) 250 Taxes minus Transfer Payments (T�) 325 Consumption (C�) 500 Investment (I�) Complete the following table by using national income accounting identities to calculate national saving. In your calculations, use data from the preceding table. National Saving (S)National Saving (�) = Y-C-G or G-T or Y-C or Y-T-G = C or Y or I or G $ __________ Million Complete the following table by using national income accounting identities to calculate private and public saving. In your calculations, use data from the initial table. Private Saving = Y-C-T or T-G or C-T or Y-T-I = $ __________…arrow_forward
- Write the Total Spend equivalence in an open and governmental economy. (Variables will be written with their names, not abbreviations)arrow_forwardCa=25+0.75 (Y-T) lg = 50 Xn=10 G = 70 T= 30 (Advanced analysis) The accompanying equations are for a mixed open economy. The letters Y, Calg Xn, G, and T stand for GDP, consumption, gross Investment, net exports, government purchases, and net taxes, respectively. Figures are in billions of dollars. The equilibrium level of GDP for this economy isarrow_forwardAccording to the figure showing 2020 GDP for selected countries, how much larger (in percentage terms) is America's GDP than: 21.43 14.34 5.08 United China Japan States b. Russia? % larger Copyright © McGraw Hill LLC. Permission required for reproduction or display. GROSS DOMESTIC PRODUCT (in U.S. $ trillion) % larger 3.86 2.87 2.83 1.70 1.27 Germany India Great Britain Russia Mexico Source: Gross Domestic Product 2020. The World Bank Group, March 2021 0.53 Sweden Instructions: Round your responses to the nearest whole number. a. Germany? 0.21 Greece 0.01 Haitiarrow_forward
- Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSONEngineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
- Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage LearningManagerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage LearningManagerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education