Introductory Economics- Principle of Economics
Question
| WORDS COUNT | REFERENCE |
| 500 | APA |
QUESTIONS:
Question 1– You are given the data below for 2008 for the imaginary country of Amagre, whose currency is the G.
Consumption 350 billion G
Transfer payments 100 billion G
Investment 100 billion G
Government purchases 200 billion G
Exports 50 billion G
Imports 150 billion G
Bond purchases 200 billion G
Earnings on foreign investments 75 billion G
Foreign earnings on Amagre investment 25 billion G
Compute net foreign investment.
Compute net exports.
Compute GDP.
Compute GNP.
In addition to responding with a quantitative answer, briefly describe how you arrived at your answers.
Question 2– The Nottinghamshire Research Observatory in England calculated that students who attend Nottingham Technical University spend about £2,760 each in the local economy for a total of £50.45 million. In total, the impact of their spending on the local economy is £63 million. Calculate the size of the student spending multiplier.
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Answer ( 1 )
In the economy there is circular flow of the income. Money that is earned flows from one person to another. Small increase in the spending will have a big impact on the economy. Since in the economy, most of the people spend their extra income so money flow in the economy from one person to another. When money spend keeps on multiplying when it flows through the economy it refers to Multiplier effect. By multiplying effect you can get to know the total impact of spending on the economy.