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In an economy, firms tend to hold 30% of output as inventory.
i. If in a period 1, total output is 200 units, calculate the stock of inventory in that period.
ii. If production increases by 50% in the following period, calculate inventory investment
over the two periods.
Step by step
Solved in 2 steps
- What is the level of Y if the change in inventory is -200? Planned Government Net Exports Aggregate Change in Real GDP (Y) Consumption (C) Investment (I') Purchases (G) (NX) Expenditures (AE) Inventories 10000 8200 800 11000 9000 600 12000 9800 13000 14000 15000 800 Select an answer and submit. For keyboard navigation, use the up/down arrow keys to select an answer. a 10000 b 11000 C 12000 d 13000Calculate business investment for the following data: Y = 55,000 C = 40,000 G= 5,000 NX= - 2000 A.) Investment is $9,800 B.) Investment is 12,000 C.) Investment is 3600 D.) Investment is 1,200Is the purchase of equipment or machinery a part of consumption or investment? Why?
- Investment is: A. Education, any new plant, equipment, additional inventory, computer software, or residential housing B. Any new stocks and bonds, plant, equipment, additional inventory, computer software C. Any new plant, equipment, additional inventory, computer software, or residential housing D. Any new plant, equipment, employee training, additional inventory, computer software, or residential housing E. All of the aboveFor a typical demand curve for apples, the horizontal axis shows the amount of apples consumers would be willing and able to purchase in a market, in a given time period. So the value on the horizontal axis is a. a Stock variable b. a rate of change. c. measured in dollars d. a Flow VariableWhat is investment? A. Expenditure on goods produced but not consumed during the period under consideration B. Expenditure on goods produced and consumed during the period under consideration C. Expenditure on goods by the government. D. Expenditure on wages
- 4) economy is in a recession and decrease(s) when the U.S. economy is expanding. A) Consumer spending B) Planned investment C) Net exports D) Unplanned investment usually increase(s) when the U.S.The change in consumption divided by the change in disposable income is equal to A. household saving. B. the slope of the consumption function. C. real GDP. D. aggregate expenditure.Describe the Investment Decision for a Simple Investment?
- 14. Calculate Equilibrium GDP (Y*) in each of the following situations (IP is Autonomous Planned Investment): (a) C 50+.75(Y-10), IP = 100, G=20, NX = -15. (b) a = 10, MP C = .8, T10, TR= 5, IP=50, G = 40, NX = 0. (c) a = 15, MP C .85, T = 15, TR= 10, IP= 55, G=45, NX = 5. (d) The MPC is 0.75, Autonomous Consumption is 100, Autonomous Planned Investment is 80, Government Spending is 50, Net Exports are -20, Lump-sum Taxes are 50, and Transfer Payments are 20.Which of the following can cause planned investment by firms to increase? a. To reduce constant budget deficits, the government announces plans to increase the corporate tax rate. b. An increase in the interest rate due to an increase in the cost of making financial transactions. c. Firms become optimistic about economic conditions after seeing reports of strong growth in consumer spending. d. A major recession has reduced consumption spending, hurting profit levels for high-end car manufacturers.The consumption function is relationship between consumption and: Select one: a. planned aggregate expenditure. b. total spending. c. investment. d. disposable income.