3. If in the closed private economy the aggregate expenditure equilibrium is 470
ID: 1092642 • Letter: 3
Question
3. If in the closed private economy the aggregate expenditure equilibrium is 470 billion. If exports of 12 billion and imports of 12 billion are now added as well as an additional 70 billion in spending by the government and given a marginal propensity to consume of .8 please explain what will happen to the aggregate expenditure curve and what will happen to the equilibrium level of GDP.
2. Wanda works part time 1 hour a week baking cookies at cookies R us but is desperately seeking full time work to support her daughter Nina, who is in the 5th grade. Bobby was let go at his job as a bubble gum inspector for placing his gum under the table top at work; now he spends all his time watching game shows on TV. Jose used to be a typewriter repair person for ACME type writer repairs, but has been out of work and unable to find work ever since ACME typewriter repairs closed due to a lack of business. Nancy works forty hours a week feeding monkeys at the local zoo, Veronica quit her job as a drinking fountain attendant when she got her degree and has been looking for a job as an accountant. Becky and Denny are bear trainers but are currently unemployed and have been unable to find work because it is hibernation season for bears, and bears cannot be trained each year during hibernation season. Who is frictionally unemployed?
A) Veronica
B) Bobby
C) Jose
D) Becky and Denny
E) Veronica, Becky, and Denny
3.
If demand and supply are in equilibrium and then there is an increase in taste for the good with a simultaneous decrease in resource price:
A) The market will remain at its current level of equilibrium.
B) Both equilibrium price and quantity will increase.
C) Equilibrium quantity will increase and equilibrium price will be indeterminate.
D) Equilibrium price will increase and equilibrium quantity will be indeterminate.
E) Both equilibrium price and quantity will decrease.
4.
State in your own words how a change in the marginal propensity to consume will affect the multiplier and how this in turn will affect the level of GDP output.
5. Consumption is $100, wages are $1000, rental income is $500, profits are $10,000, government spending is $75, exports are $50, interest income is $100, gross investment spending is $50, imports are $25. What is the size of nominal GDP measured from the expenditure approach?
6. Consumption is $500, investment is $300, government spending is $450, exports are $200, imports are $100, price index is 100, total population is 1000. What is real GDP per capita?
A) $135
B) $1350
C) $1.35
D) $1550
E) $950
7.
In year one, soda sells for $1 a bottle. In year two, soda sells for $1.50 a bottle. In year three, soda sells for $1.80 a bottle. In year four, soda sells for 2.25 a bottle. What is the price index for soda in year three?
8.
Consumption in year three is $200, investment in year three is $100, government spending in year three is $150, exports in year three are $100, imports in year three are $50. Prices for everything in year one are $20, in year two prices for everything are $28, in year three prices for everything are $35. What will the size of real GDP be for year three?
5. Consumption is $100, wages are $1000, rental income is $500, profits are $10,000, government spending is $75, exports are $50, interest income is $100, gross investment spending is $50, imports are $25. What is the size of nominal GDP measured from the expenditure approach?
A) $11,600B) $50
C) $250
D) $10,700
E) $11,900
6. Consumption is $500, investment is $300, government spending is $450, exports are $200, imports are $100, price index is 100, total population is 1000. What is real GDP per capita?
A) $135
B) $1350
C) $1.35
D) $1550
E) $950
7.
In year one, soda sells for $1 a bottle. In year two, soda sells for $1.50 a bottle. In year three, soda sells for $1.80 a bottle. In year four, soda sells for 2.25 a bottle. What is the price index for soda in year three?
A) 180B) 80
C) 66.67
D) .8
E) $1.80
8.
Consumption in year three is $200, investment in year three is $100, government spending in year three is $150, exports in year three are $100, imports in year three are $50. Prices for everything in year one are $20, in year two prices for everything are $28, in year three prices for everything are $35. What will the size of real GDP be for year three?
A) $2.86B) $500
C) $0.1
D) $285.71
E) $550
Explanation / Answer
2) D) Becky and Denny
3) A) The market will remain at its current level of equilibrium.
4)
5) C) $250
6) C) $1.35
7) A) 180
8) D) $285.71
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