ECON 2400 Study Guide - Midterm Guide: Gdp Deflator, Autonomous Consumption, Consumption Function

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Part i (multiple choice: d. gross investment = new houses+equipment and plant investment+change in inventories = 1940+2560-160=4340, b. nx=ex-im=1420-1480=-60, b. y=c+i+g+nx. C=consumer non-durables+consumer durables + households spending on services =2380+1890+2650=6920. The real gdp, not the nominal gdp, measures the total quantities of goods and services produced in the economy of the economy. The gdp deflator measures the general price level of goods and services in the economy: d. investment in national accounts is physical investment, not financial investment. It includes all business purchases of goods (machines, factories, etc. ) and household purchases of new houses, but not household purchases of stocks and bonds (which are financial investment). When net investment is positive, physical capital stock in the next period has to be higher than in the previous period. Kt+1=kt+net investmentt: c. private savings equals y-t-c, which equals disposable income minus consumption, a. When public savings is negative, i. e. , t

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