Homework Answers
(1)
| Output GDP=DI | Consump | Saving | Investment | Export | Import | Net Export | Agg. Exp | Unplnd Invest | Output & Employment |
| 250 | 260 | -10 | 10 | 8 | 3 | 5 | 275 | -25 | RISE |
| 270 | 270 | 0 | 10 | 10 | 5 | 5 | 285 | -15 | RISE |
| 290 | 280 | 10 | 10 | 12 | 7 | 5 | 295 | -5 | RISE |
| 310 | 295 | 15 | 10 | 15 | 10 | 5 | 310 | 0 | Remain Unchanged |
| 330 | 310 | 20 | 10 | 17 | 12 | 5 | 325 | 5 | FALL |
Agg. Exp = Consumption + Investment +Net Export.
GDP = consumption + saving.
Unplanned Investment = GDP - Agg. Exp
(2) At an output of $270 million, the unplanned inventories are negative 15 million (i.e., -15 million). It means at an output level of $270 million the aggregate expenditure is higher than output by $15 million.
(3) At equilibrium GDP = Aggregate Expenditure.
At $330 million of output, the unplanned investment is $5 million, it means aggregate expenditure falls short by $5 million to reach the equilibrium.
So to reach the equilibrium there is a need to increase the net export by $5 million in the open economy.
(4) Equilibrium is achieved at the output level of $310 million. At this level, there is neither increase nor decrease in output level.
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First blank: Imports, exports, saving, or
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Select all that apply
Second Blank: Always, when savings equals planned
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when exports are equal to imports?
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