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Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884Macroeconomics 11th Edition by Michael Parkin
Edition 11ISBN: 9780133423884 Exercise 18
S. Economy Shrinks Modestly
GDP fell 1 percent as businesses cut investment by 8.9 percent, consumers cut spending by 1.2 percent, purchases of new houses fell 38 percent, and exports fell 29.9 percent.
Use the letters on the figure in problem to indicate the flow in which each item in the news clip occurs. How can GDP have fallen by only 1.0 percent with the big expenditure cuts reported?
Problem
Use the following figure, which illustrates the circular flow model, to work Problem.
During 2008, in an economy:
Flow B was $9 trillion.
Flow C was $2 trillion.
Flow D was $3 trillion.
Flow E was -$0.7 trillion.
Name the flows and calculate the value of
a. Aggregate income.
b. GDP.
GDP fell 1 percent as businesses cut investment by 8.9 percent, consumers cut spending by 1.2 percent, purchases of new houses fell 38 percent, and exports fell 29.9 percent.
Use the letters on the figure in problem to indicate the flow in which each item in the news clip occurs. How can GDP have fallen by only 1.0 percent with the big expenditure cuts reported?
Problem
Use the following figure, which illustrates the circular flow model, to work Problem.
During 2008, in an economy:
Flow B was $9 trillion.
Flow C was $2 trillion.
Flow D was $3 trillion.
Flow E was -$0.7 trillion.
Name the flows and calculate the value of
a. Aggregate income.
b. GDP.
Explanation
Verified
Verified
The flow A in the above figure is Aggre...
Macroeconomics 11th Edition by Michael Parkin
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