2003 independant q13 (1 Viewer)

[symo]

can someone explain this, its got a table so i canyt copy it out. its got income, investment + consumption figures for 4 levels. i ended up getting it right though but dont understand how to work it out. its d) 6000m. but how? cheers

 

[saves.the.day]

The questions available her to anyone else that wants a look
http://www.boredofstudies.org/courses/arts/economics/2003_Economics_T_Independent_Independent.pdf

OK

You want NY = C + I .. nationional income to equal consumption and investment as it asks what is the level of NY that puts this into equilibrium.

If you look, investment is autonomous.. it doesn't change. it is 200 no matter what level of NY. Consumption increases by 800 each time. If you add up C+I for each row, you dont get a value for NY.

Using this pattern for the first 4 rows, we could continue writting out the rest of the table. So you can get the 5th, 6th and 7th row as shown below.

Income || Consumption || Investment
4000         4200              200
5000         5000              200
6000         5800              200

If you look for the row that satisfies the equation NY = C+I
The 3rd row gives 6000 = 5800 + 200 and this gives 6000 = 6000

So we can say that when national income is 6000, the economy is in equilibrium.

Hope this makes sense. If you need me to clarify. Just ask.

Good Luck with HSC

 

[TastesGoodBut]

ahh cool

i hate those questions
i guessed it right in one of our exams luckily

i new what the formula was but i had nfi lol

 

[symo]

ok.. cheers mate.. i was thinking something like that thats y i went d) cause all the other were within.