3 Demanueu Suppley Personal Consumption Expenditures $4,500 Consumption of Fixed Capital 150 Gross Private Domestic Investment 800 Government Purchases 950 Exports 65 11 Imports 85 Assuming that Toontown is a private, closed economy, the economists of the country have access to the following information: Saving is $ billion and planned investment is $28 billion at the $175 billion level of output. The next 4 questions are based on this information. What is true for the economy of Toontown? (a) Planned investment is positive | (b) Planned investment is negative (c) The economy is in equilibrium (d) Planned investment is equal to actual investment 2. Suppose the economy is in equilibrium, that is savings is equal to planned investment ($28 billion), how much is the GDP when the level of output is $210 billion. (a) $250 billion (b) $238 billion (c) $182 billion (d) $200 billion 3. Assume that the government sector is introduced in Toontown. Government collects $10 billion in taxes and spends $10 billion on government purchases. If all other information in question #9 remains the same, the inclusion of the government sector in the economy will: (a) Increase the GDP (b) Decrease the GDP Will have no effect on the GDP (d) Cannot be determined 4. Toontown opens its borders to foreign trade, such that we now have a public, open economy. The correct formula for calculating GDP in this case is: (a) GDP = C+I (b) GDP = C +I, +G (c) GDP = C +1 + Net Exports (d) GDP =C+1, + G + Net Exports DELL