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solutions05 - C h a p t e r 5 MEASURING GDP AND ECONOMIC...

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1 5 MEASURING GDP AND ECONOMIC GROWTH* * * * This is Chapter 21 in Economics . Solutions to the Odd-Numbered Problems 1. a. Aggregate expenditure is \$10,198 billion. Aggregate expenditure is the sum of consumption expenditure, investment, government expenditure, and net exports. In the figure, B is consumption expenditure, D is investment, C is government expenditure, and E is net exports. Therefore aggregate expenditure equals \$7,064 billion plus \$1,624 billion plus \$1,840 billion plus \$330 billion, which is \$10,198 billion. b. Aggregate income is \$10,198 billion. Aggregate income equals aggregate expenditure, which from 1(a) is \$10,198 billion. c. GDP is \$10,198 billion. GDP equals aggregate expenditure, which from 1(a) is \$10,198 billion. d. Government budget deficit is \$360 billion, that is, a government budget surplus of \$360 billion. The government budget deficit equals government expenditures minus net taxes. C is government expenditure, and A is net taxes. So the government budget deficit equals \$1,840 billion minus \$2,200 billion, which is \$360 billion, that is, the government had a government budget surplus of \$360 billion. e.

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This homework help was uploaded on 04/15/2008 for the course ECON 3 taught by Professor Peters during the Winter '07 term at UCSD.

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solutions05 - C h a p t e r 5 MEASURING GDP AND ECONOMIC...

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