1 / 1

Daily quiz-27 (04/08 ): Print your name and ID in BLOCK letters.

Daily quiz-27 (04/08 ): Print your name and ID in BLOCK letters. Suppose GDP = $14 trillion, Consumption = $8 trillion, G = $4 trillion, T = 4 trillion. Q1. Calculate equilibrium investment. Ans : Investment = national saving = 2 trillion

iman
Download Presentation

Daily quiz-27 (04/08 ): Print your name and ID in BLOCK letters.

An Image/Link below is provided (as is) to download presentation Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author. Content is provided to you AS IS for your information and personal use only. Download presentation by click this link. While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server. During download, if you can't get a presentation, the file might be deleted by the publisher.

E N D

Presentation Transcript

  1. Daily quiz-27 (04/08): Print your name and ID in BLOCK letters. Suppose GDP = $14 trillion, Consumption = $8 trillion, G = $4 trillion, T = 4 trillion. Q1. Calculate equilibrium investment. Ans: Investment = national saving = 2 trillion Q2. Suppose income taxes are cut by 200 billion and consumers save all of the extra disposable income. How does equilibrium investment change? Ans: new private saving = 14 – 3.8 – 8 = 2.2 trillion, change in private saving = +0.2 trillion, new public saving = 3.8 – 4 = - 0.2 trillion, change in public saving = - 0.2 trillion, change in investment = change in national saving = + 0.2 – 0.2 = 0 trillion. Q3. Suppose income taxes are cut by 200 billion and consumers spend ¾ ths of the extra disposable income and save the rest. How does the equilibrium investment change? Ans: new private saving = 14 – 3.8 – 8.15 = 2.05 trillion, change in private saving = + 0 .05 trillion, change in national saving = + 0.05 – 0.2 = - 0. 15 trillion = change in investment. Investment falls.

More Related