--%>

Equilibrium GDP for the open economy

The data of columns 1 and 2 of the given table are for private closed economy. Open up this economy to international trade through including the export & import figures of columns 3 and 4.  Fill  up in columns 5 and 6 to find out the equilibrium GDP for the open economy. Describe why this equilibrium GDP varies from that of the closed economy.

365_Private closed economy.png

E

Expert

Verified

Net export data for column 5 (top to bottom); $-10 billion in every space. Aggregate expenditure data for column 6 (top to bottom): $230; $270; $310; $350; $390; $430; $470; $510. For the open economy equilibrium GDP is $350 billion, $50 billion below the $400 billion equilibrium GDP for the closed economy. The $-10 billion of overall exports is a leakage which reduces equilibrium GDP by $50 billion. 

   Related Questions in Finance Basics

  • Q : What is a Provision Provision : The

    Provision: The language in a bill or act which imposes necessities or constraints on actions or expenditures of the state. The provisions are frequently employed to constrain the expenditure of appropriations however it might also be employed to give

  • Q : Working capital what are the advantages

    what are the advantages and disadvantages of working capital source of finance

  • Q : Correlate each to the New Economy

    Normal 0 false false

  • Q : Define Non-add Non-add : Refers to the

    Non-add: Refers to the numerical value which is displayed in parentheses for informational purposes however is not comprised in computing totals, generally as the amounts are by now accounted for in the budget system or display.

  • Q : Define Appropriations Limit

    Appropriations Limit, State (SAL): The constitutional limit on the expansion of some appropriations from tax proceeds usually set to the level of the previous year's appropriation limit as adjusted for modifications in cost of living

  • Q : What do you mean by Without Regard To

    What do you mean by Without Regard To Fiscal Year (WRTFY): Where an appropriation has no period of restriction on its accessibility.

  • Q : Influence of a quota Normal 0 false

    Normal 0 false false

  • Q : Primary requirement for JIT inventory

    Describe the primary requirements for a successful JIT inventory control system? For a JIT system to be successful the supplier has to be willing and capable to deliver materials immediately and the quality of delivered materials has to be high.

  • Q : Define Organization Code Organization

    Organization Code: The four-digit code allotted to each state governmental entity (and at times to exclusive budgetary programs) for fiscal system aims. The organization code is the initial segment of the budget item or appropriation

  • Q : Better risk measure in evaluating risk

    Why is the coefficient of variation a better risk measure to employ than the standard deviation while evaluating the risk of capital budgeting projects? The coefficient of variation is a better risk measure than the standard deviation alone sinc