University:
Montclair State University
Course:
ECON 101 | Applied Macroeconomics
Academic year:

2023
Views:

216

Pages:

2
Author:

Reece Barker

Week 11 Assignment (15 Points) Question Answer Whenever there is change in spending, there will be a change in real This is because when someone spends, it increases the aggregate GDP. Explain why this is so.(3 Points) demand, which in turn increases the output of goods. This increase contributes to the change in real GDP. Use the graph below to answer the following questions( 3 Points) The equilibrium GDP is 500 in billions of dollars. (a) What is the equilibrium GDP? (b)Suppose the level of real GDP is $650 billion. Explain why this may This may occur because spending increases and then the GDP will increase as well. occur What is the effect of net exports, either positive or negative, on Positive net exports would increase aggregate expenditures equilibrium GDP?(3 Points) The data in the first two columns below are for a private closed economy. Use this table to answer the following questions.(7 Points) Real GDP Aggregate = DI expenditures Net Exports (billions) Imports Aggregate expenditures exports (billions) (billions) (billions) (billions) (billions) $100 $120 $10 $15 $_-5____ $_115____ 125 140 10 15 ___-5__ _135____ 150 160 10 15 __-5___ _155____ 175 180 10 15 __-5___ _175____ and create an expansionary effect, and negative net exports would do the opposite, so equilibrium GDP would expand. a) GDP = 200 billion b) GDP= 175 billion c) Equilibrium GDP would return to 200 billion d) Equilibrium GDP would rise to 225 billion e) The multiplier is 5 200 200 10 15 ___-5__ _195____ 225 220 10 15 __-5___ __215___ 250 240 10 15 __-5___ _235____ 275 260 10 15 ____-5_ __255___ (a) What is the equilibrium GDP for the private closed economy? (b) Including the international trade figures for exports and imports, calculate net exports and determine the equilibrium GDP for a private open economy. (c) What will happen to equilibrium GDP if exports were $5 billion larger at each level of GDP? (d) What will happen to equilibrium GDP if exports remained at $10 billion, but imports dropped to $5 billion? (e) What is the size of the multiplier in this economy?

Economics Homework Chapter 11

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