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Unformatted text preview: 5. a Use Y = C + I + G + NX 6. a Apply formula on p.17 of topic 1 slides 7. c See Topic 1 slides page 7 Problem (a) Increase in Y = $5,000, the value of the 50 tables produced. Increase in C = $1,500, for the 15 tables bought by consumers. Increase in I = $3,500, for the 30 tables sold to the company and 5 that increase inventories. (b) Increase in GDP = Increase in G = $40,000. This is a government purchase of law enforcement services. (c) Increase in GDP = $0, because nothing is produced. The $20,000 is just a transfer (d) Increase in GDP = Increase in Consumption = $40. The sales services, or added value, of the bike shop counts as a service, and thus, it is consumption. (e) Increase in GDP = $30,000 Increase in C = $80,000 Increase in NX = -$50,000 (because of imports from Canada)...
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- Fall '09
- Macroeconomics, gross domestic product, Value added, $40, $0