Question

# The data in the first two columns below are for a private closed economy. Use this...

The data in the first two columns below are for a private closed economy. Use this table to answer the following questions.

 Real GDP = DI (billions) Aggregate expenditures (billions) Exports (billions) Imports (billions) Net exports (billions) Aggregate expenditures (billions) \$ 80 \$100 \$15 \$5 \$_____ \$_____ 120 130 15 5 _____ _____ 160 160 15 5 _____ _____ 200 190 15 5 _____ _____ 240 220 15 5 _____ _____ 280 250 15 5 _____ _____ 320 280 15 5 _____ _____ 360 310 15 5 _____ _____

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 \$10 billion larger at each level of GDP?

d. What will happen to equilibrium GDP if exports remained at \$15 billion, but imports rose to \$15 billion?

e. What is the size of the multiplier in this economy?

a. Equilibrium is attained where real GDP = Aggregate expenditure = \$160

b. Net Exports = 15 - 5 = 10 and Equilibrium GDP = 200 b

c. Equilibrium GDP increases to 240.

d. When imports = 15 which is equal to exports, net exports = 0 and economy will be as same as close economy. so, GDP will fell to 160 b #### Earn Coins

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