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The table below shows data for India's economy. Real GDP is measured in millions of rupees. Price level Real GDP supplied in the short run

  1. The table below shows data for India's economy. Real GDP is measured in millions of rupees.

Price level

Real GDP supplied in the short run

Real GDP demanded

a

114

23,501

35,898

b

120

25,355

32,341

c

125

27,670

27,670

d

131

30,366

18,569

e

138

33,164

15,898

If potential GDP in India is _______26 500_ million rupees, India is experiencing ____a recessionary_____.

  1. 26,500; an inflationary gap
  2. 28,500; an above full-employment gap
  3. 26,500; a recessionary gap
  4. 30,000; a potential GDP gap

  1. The table below shows data for Germany including real GDP (in billions of euros) and the price level.

Real GDP

Price level

2002

2,088

102.6

2003

2,083

103.6

2004

2,105

106.0

2005

2,121

108.2

2006

2,182

109.7

2007

2,237

109.5

  1. What was the economic growth rate in 2004?

  1. What was the inflation rate in 2006?

  1. The table shows some of the items in the U.S. National Income and Product Accounts in 2008

Item

Amount (trillions of USD)

Consumption expenditure

10.0

Government expenditure

2.9

Indirect taxes less subsidies

0.8

Depreciation

1.9

Net factor income from abroad

0.2

Investment

2.1

Net exports

-0.7

Statistical discrepancy

0

Use the expenditure approach to calculate U.S. GDP in 2008.

  1. In the economy of St. Maynard Island, autonomous consumption expenditure is $185 million, and the marginal propensity to consume is 0.75. Investment is $150 million, government expenditure is $100 million, and net taxes are $80 million. Investment, government expenditure, and taxes are constant - they do not vary with income. The island does not trade with the rest of the world.

  1. What is the consumption function?

  1. What is the aggregate expenditure function?

  1. What is the island's autonomous aggregate expenditure?

  1. What is the size of the multiplier in St. Maynard Islands economy?

  1. What is the island's aggregate planned expenditure and what is happening to inventories when real GDP is $1,100 million?

e) What is the economy's equilibrium aggregate expenditure?

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