Online Quiz #2 Answers

Online Quiz#2 - Quiz#2 Answers 1 A The total value of production of pizzas is 150 50 $10 = $75K Of this amount government buys $10 2500 = $25K

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Unformatted text preview: Quiz #2 Answers 1. A - The total value of production of pizzas is: 150* 50 * $10 = $75K. Of this amount, government buys $10* 2500 = $25K. Therefore what is left for consumption is $75K-$25K = $50K. C = $50K. As for I, it is 50* 1* $500 = $25K. National income is equal to AE. AE here is C+I+G = $100K. 2. C - HH income before taxes = National income since firms do not keep any profits. Therefore HH income before taxes = $100K. T = $100K * 0.2 = $20K so HH disposable income = $80K. DI - C = $80K - $50K = $30K. 3. C - T = $100K *.2 = $20K and G = $25K. T-G = $ -5K and the government runs a budget deficit. 4. D - Aggregate S = I and since I = $25K, so is S = $25K. We can also calculate this figure by: HH savings + Gov savings + Firms savings = $30K - $5K + $0= $25K....
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This test prep was uploaded on 04/07/2008 for the course ECON 201 taught by Professor Salehie during the Winter '08 term at University of Washington.

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Online Quiz#2 - Quiz#2 Answers 1 A The total value of production of pizzas is 150 50 $10 = $75K Of this amount government buys $10 2500 = $25K

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