Use the following information to answer questions 18-21: Consumption=$400,000,00

ID: 1192025 • Letter: U

Question

Use the following information to answer questions 18-21:

Consumption=$400,000,000

Savings=$11,000,000

Imports= $23,000,000

Investments=$15,000,000

National Income=$67,000,000

Governmental Spending=$27,000,000

Taxes=$16,000,000

Exports=$15,000,000

14. What is the situation in the area of trade (use a dollar amount)?

a. A trade-surplus of $8,000,000

b. A trade-deficit of $8,000,000

c. A trade-surplus of $2,000,000

d. A trade-deficit of $2,000,000

e. A trade-balance exists

19. What do keakages equal (measured in dollars)?

20. What do injections equal (measure in $)?

21. Is this economy in equilibrium?

a. Yes because leakges = injections

b. No, unemployment exits because injections are greater than leakages

c. No, inflation exitsts because injections are greater than leakages

d. No, unemployment exists because leakages are greater than injections

e. No, inflation exists because leakages are greater than injections

(14) Option (b)

Trade balance = Exports - Imports

= $(15,000,000 - 23,000,000) = - $8,000,000 (Trade deficit)

(19)

Leakage = Savings + Imports = $(11,000,000 + 23,000,000) = $34,000,000

(20)

Injections = Investment + Exports

= $(15,000,000 + 15,000,000) = $30,000,000

(21) (d)

Leakages exceed injections by $4,000,000 which lowers GDP, output and increases unemployment.

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