1.
Answer the question on the basis of the following data for a
private closed economy.
GDP = DI C
$100 100
120 114
140 128
160 142
180 156
200 170
Refer to the data. At the $120 billion level of DI, the APC is:
Group of answer choices
95 percent.
90 percent.
88 percent.
80 percent.
2.
Answer the question on the basis of the following data for a
private closed economy.
GDP = DI C
100 100
120 114
140 128
160 142
180 156
200 170
Refer to the data for a private closed economy. If investment is
$24 billion, the equilibrium level of GDP will be:
Group of answer choices
$140.
$160.
$180.
$200.
1)
Formula :
APC = Average propensity ro consume = C/Y
When DI = 120 billion, C = 114 billion
=> APC = (114 billion/120 billion) = 0.95 = 95%
Hence, the correct answer is (a) 95 percent.
2)
WHen economy is private and cloed then Equilibrium occurs when GDP = Consumption + Investment and here Investment = 24 billion
We can see from above table that when GDP (= DI) = 180 billion, C = 156 billion.
So, when GDP = 180 billion, Consumption + Investment = 156 billion + 24 billion = 180 billion
Thus GDP = C + I when GDP = 180 billion.
Hence equilibrium GDP = 180 billion
Hence, the correct answer is (c) $180
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