Calculating nominal GDP, real GDP, price index and the inflation rate from a given set of data

Consider an economy where only three products x,y, and z are produced and sold for the prices indicated below: Product;(Base year price);(Current year price);(Current year production) X; $1; $2; 200 Y; $4; $5; 50 Z; $5; $6; 100 A. What are the values of nominal GDP and real GDP in the current year? B. Explain the dif ...continues

c=40+.5Y

Definitions:c=level of consumer spending, y=level of income, s=level of savings if C=40+ .5Y a. Find the level of consumer spending and the level of savings for the following levels of income: 100, 200, and 300. b. What will be the equilibrium level of income when planned investment expenditure is equal to 60? c. What ...continues

Working with consumption, multipliers, saving and planned investment expenditure.

Definitions: c=level of consumer spending y=level of income s=level of savings If C=40+ .5Y a. Find the level of consumer spending and the level of savings for the following levels of income: 100, 200, and 300. b. What will be the equilibrium level of income when planned investment expenditure is equal to 60? ...continues

Understanding the Keynesian and monetarist views of crowding out.

What is crowding out?

The impact of rising interest rates.

How does increased interest rates affect the economy?

Frozen foreign-capital flows

After a country's (not USA) foreign-capital flows are frozen, a large international supply of USD dollars shows up. What happens to the quantity of USD dollars demanded? a. Quantity demanded of dollars goes up, at lower interest rates. b. Quantity demanded of dollars goes up, at higher interest rates. c. Quantity demand ...continues

The affects of demand shifts

The demand curve for French plutonium shifts outward, at about the same time as the appearance of the foreign-exchange dollars. What happens to the demand for French Francs? a. Transaction demand goes up b. Precautionary demand goes up c. Speculative demand goes up d. Nothing

Determining the effects of a situation on the economy. A multiple choice question with an explained answer.

Consumer-entrepreneurs set up a small-scale production plant on their side of the river, offering competition to the producers on the other side. Unfortunately, without proper licensing this production plant is technically illegal. Accordingly the consumer-entrepreneurs have to sell thier product at a price 20% higher than the p ...continues

Phillips curve

In the 1970's the Phillips curve shifted to the right. Which outcome is likely? a. short-run aggregate demand increases b. long-run aggregate demand increases c. long-run aggregate supply increases d. long-run aggregate supply decreases

Quantity theory of money and inflation

To what extent does the quantity theory of money provide a realistic view of inflation?