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4 marksBasic Keynesian Models

CAPE Economics Unit 2 · 2010 · Paper 2 · Question 1(b)(iii)

An economy has the following macroeconomic equations and values: C = 40 + 0.80Y G = 400 I = 50 NX = 10 - 0.30Y

Determine the equilibrium level of real GDP.

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Other parts of this question

  1. 1(a)(i)Explain the difference between 'Real GDP' and 'Nominal GDP'.[4 marks]
  2. 1(a)(ii)Discuss TWO reasons why GDP alone is not a complete measure of net economic welfare.[6 marks]
  3. 1(b)(i)Determine the value of autonomous consumption.[1 mark]
  4. 1(b)(ii)Determine the value of the marginal propensity to consume.[1 mark]
  5. 1(b)(iv)Determine the value of the multiplier.[3 marks]
  6. 1(c)(i)Briefly describe Net National Product (NNP) and state how it is measured.[3 marks]
  7. 1(c)(ii)Briefly describe Personal Disposable Income (PDI) and state how it is measured.[3 marks]

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