Question
Consider an open economy with a current population of 0.5 million people, and where the potential GDP is 3.2 billion. consumer expenditure is represented by
Consider an open economy with a current population of 0.5 million people, and where the potential GDP is 3.2 billion. consumer expenditure is represented by the following equation C = 50 + 0.75DI. Exports are constant at $400 million, and investors want to spend $500 million at every level of income. The government purchases are $300 million, imports are constant at $450 million and taxes are $200 million.
Now consider that investors become optimistic about the country's future, and raise their investment to $730 million in the following period. At the same time, given the birth rate, morality rate, and net migration, the economy experienced an increase of 10% in its population.
1- What is the value of the simple multiplier?
2- As a result of these events, what is the change in the equilibrium level of GDP? (report your answer at 2 decimal places and in million of dollars)
3- As a result of these events, what is the change i
4- What is the value of the gap? (report your answer at 2 decimal places and in million of dollars)
5- As a result of these events, what is the current population level? (report your answer at 2 decimal places and in million of people)
6- As a result of these events, what is the current real GDP per capita? (report your answer at 2 decimal places and in million of people)
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