(a) Table below shows data for a hypothetical economy called Disneyland in millions of dollars. Study the data and calculate the following.
(i) Calculate the level of GDP for Disneyland. (1 mark)
(ii) Calculate the withdrawals from and injections into the circular flow and explain. (2 mark)
Hypothetical Economy: Disneyland
Savings
200$ m
Gross fixed capital formation
575 $ m
Household Consumption
1550$ m
Income tax revenue
750$ m
Indirect tax revenue
475$ m
Import expenditure
600$ m
Export expenditure
850$ m
Government expenditure on goods and services
900$ m
(b) The table below shows economy of Disneyland’s aggregate expenditure schedule (in $ billions).
GDP
100
120
140
160
180
200
220
National expenditure
115
130
145
160
175
190
205
(i) Define the concept of multiplier and draw the figure to show the government expenditure multiplier? (1 mark)
(ii) Assume that full employment is achieved at a level of GDP of $200 billion. Will there be an inflationary or a deflationary gap, and what is its size? Illustrate and explain. (2 mark)
(iii)By how much would government expenditure have to be changed in order to close this gap assuming that there is no shift in injections or withdrawals? (1mark)
4.5 marks
ECON 11026: Assignment Marking Sheet
Student Name:to the company’s board of directors concerning the company’s future direction.
Place this order with us and get 18% discount now! to earn your discount enter this code: special18 If you need assistance chat with us now by clicking the live chat button.