Question
LONG-RUN MODEL OF THE ECONOMY (10 POINTS) The closed economy of Classicland was in 2006 in its LONG-RUN EQUILIBRIUM. Classicland has the following information for
LONG-RUN MODEL OF THE ECONOMY (10 POINTS) The closed economy of Classicland was in 2006 in its LONG-RUN EQUILIBRIUM. Classicland has the following information for the year 2006 related to GDP (in billions of dollars):
Variable | Amount |
Total Output (GDP) | 2,000 |
Consumption | 1,400 |
Planned Investment | 200 |
Changes in inventories | 0 |
Government transfer payments | 100 |
Government purchases | 400 |
Taxes | 180 |
Calculate the value of the following macroeconomic variables: REMEMBER: for simplicity we assume that total output is equal to total income. - Total Income: __________ - Potential Output: __________ - Total investment: ___________ - Total Spending (C+I+G): __________ - Net taxes (T) (taxes - transfers): _________ - Disposable Income (total income-T): __________ - Private Saving (S) (Disposable income- C): ________ - Total injections (I+G): ________ - Total leakages (S+T): ________ - Government budget deficit (G-T): _________
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