# Project #79093 - Economics

Brandi Oxendine

MBA 6008

Unit 5 Economic Problems

Chapter 25 Problem

4. To the right is a list of domestic output and national income figures for a certain year. All figures are in billions. The questions that follow ask you to determine the major national income measure by both the expenditures and the income approaches. The results you obtain with the different methods should be the same.

 Personal Consumption expenditures \$245 Net Foreign factor income 4 Transfer payments 12 Rents 14 Consumption of fixed capital (depreciation) 27 Statistical discrepancy 8 Social Security contributions 20 Interest 13 Proprietors’ income 33 Net exports 33 Dividends 11 Compensation of employees 16 Taxes on production and imports 223 Undistributed corporate 18 Personal taxes 21 Corporate income taxes 26 Corporate profits 19 Government purchases 56 Net private domestic investment 33 Personal Saving 20

A. Using the above data, determine, GDP by both the expenditures   and the income approaches. Then determine NDP.

B. Now determine NI in two ways: first, by making the required additions or subtractions from NDP; and second, by adding up the types of income and taxes that make up NI.

C. Adjust NI from (part B) as required to obtain PI

D. Adjust PI (from part C) as required to obtain DI.

Chapter 27

4. If the CPI was 110 last year and is 121 this year, what is this year’s rate of inflation? In contrast, suppose that the CPI was 110 last year and is 108 this year. What is this year’s rate if inflation? What term do economics use to describe this second outcome?

Chapter 29

8. Assume that the consumptions schedule for a private open economy is such that consumption

C=50+0.8Y. Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig= 30 and Xn=10 Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y=C+Ig+Xn.

A.      Calculate the equilibrium level of income or real GDP for this economy.

B.      What happens to equilibrium Y if Ig changes to 10? What does this outcome reveal about the size of the multiplier?

Chapter 30

3a.  Suppose that the aggregate demand and aggregate supply schedules for a hypothetical economy are as shown in the following table:

 Amount of Real DP Demanded GDP Demanded, Billions Price Level (Price Index) Amount of real GDP Supplied, Billions \$100 300 \$450 20 250 400 300 200 300 400 150 200 500 100 100

A.      Use the data above to graph the aggregate demand and aggregate supply curves. What are the equilibrium price level and the equilibrium level of real output in this hypothetical economy? Is the equilibrium real output also necessarily the full-employment real output?

 Subject Business Due By (Pacific Time) 08/14/2015 12:00 am
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