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Given Wk = 50; Pk = 100; Yc = 300:
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- The national income (Y) of a country has the form: Y = 0.48K0.4L0.3NX0.01 Where: K is capital, L is labor and NX is net exports. a) How will a 1% increase in labor affect income? Is there an opinion that reducing the labor rate by 2% can increase net exports by 15% while keeping income unchanged, is this true or false? b) Let NX's growth rate be 4%, K is 3%, L is 5%. Determine the growth rate of Y.Ca=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 isSuppose Country A has the same GDP as Country B, and that neither nation’s residents own factors of production used by foreign firms, nor do either nation’s firms use factors of production owned by foreign residents. Suppose that relative to Country B, depreciation, indirect business taxes, and personal income taxes in Country A are high, while welfare and Social Security payments to households in Country A are relatively low. Which country has the higher disposable personal income? Why?
- Indicate the statement True or False 1) Physical capital, denoted by K, does not affect Gross Domestic Product in the long-run.The following Table Q3 shows component of Gross Domestic Product (GDP) in ABC country for the year 2018. Table Q3: Gross Domestic Product of ABC country in 2018 Component of Gross Domestic Product (GDP) Consumption on durable and non-durable goods Consumption of services Residential and non-residential investment Change in inventories Corporate profit Transfer payment to household from Government Government pay salaries to civil servants Export Import Receipt of factor income from the rest of the world Payment of factor income to the rest of the world RM million 1,600 700 860 - 50 610 150 320 370 230 840 770 Calculate: (i) Gross Domestic Product (GDP) of ABC country using the expenditure approach. (ii) Calculate the Gross National Product of ABC country in 2018.An economy has an aggregate production function to produce goods and services Y = AK1/3L 2/3 where Y represents total output (i.e GDP), K is capital, L is labor, and A is total factor productivity (TFP). This economy devotes a share of 30% of its output to gross investment. Capital depreciates at a rate of 10% per period. The TFP level is one and there are 2 units of labor available for production. • Suppose the economy starts with a capital stock at time t = 1 equal to 1 unit. Write down the values of gross investment, net investment, capital, consumption, and output observed during the subsequent 10 periods • What is the steady state level of capital, assuming A = 1 and L = 2? • Suppose that the economy is at its steady state and there is an increase in the depreciation rate from 0.10 to 0.15. What is the new steady state value for capital? Discuss your results.
- Discuss which of the following fall into the categories of consumption, investment, government expenditure and net exports from the Y = C + I + G + NX (X – M) identity, and whether the impact is to increase or decrease GDP Your firm sells meat to IndonesiaThe following table contains data for a hypothetical closed economy that uses the dollar as its currency. Suppose GDP in this country is $1,175 million. Enter the amount for government purchases. National Income Account Value Government Purchases (GG) Taxes minus Transfer Payments (TT) 225 Consumption (CC) 625 Investment (II) 300 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) = = $ 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 = = $ million Public Saving = = $ million Based on your calculations, the government is running a budget (a. surplus, b. deficit).The value of transfer payments are a) part of G (in the equation Y = C + I + G +NX) b) an important oversight in measuring GDP c) never included in GDP because taxes will have to be raised to pay for them. d) not included in GDP until they are used to purchase goods or services.
- Consider the following data for a particular economy:GDPmp = 950Private consumption = 750Gross investment = 100Net investment = 80Exports = 250Imports = 300Net Indirect taxes = 50Net external income = 100Balance of transfers with the Rest of the World = 50Private savings = 300Calculate:a) NNPbp (Net National Product). b) Current balance. Interpret the result obtained.The economy of Ghana has a saving function S= - 100 +0.2Y, investment equal to 66, government expenditure equal to 50, export equal to 20 and an import function of M= 0.1Y. (a). What is the consumption function of the economy (b). What is the aggregate expenditure function of the economy?Answer this question based on the given information for an economy in some year. Dollar value of resource extraction activity = $20 billion Dollar value of production activity = $50 billion Dollar value of distribution activity = $70 billion Dollar value of final output = $110 billion Gross output for this economy equals