Part A

You are given the following data on possible states of a closed economy (figures in millions):

National Planned Planned Government

Income Consumption Investment Expenditure

400280 120 60

500350 12060

600420 12060

700490 12060

800560 12060

(i) Calculate the value of planned savings at the equilibrium level of national income.

(ii) Calculate the value of unplanned additions (+) or falls (-) in stocks if national income is 750 million.

(iii) Calculate the equilibrium level of national income if planned investment rises from 120 million to 150 million.

PART B

Briefly explain five reasons why a rise in real Gross Domestic Product per capita within a country over time does not necessarily mean that living standards have improved.