Question

Given the following information about each economy, either calculate the missing variable or determine that it cannot be calculated: a. Suppose C = $20.1 billion, I = $3.5 billion, G = $5.2 billion, and NX = $-1 billion. Total income is . b. Suppose total income is $1.5 trillion, G = $0.8 trillion, and C = $1 trillion. I is . c. Suppose total expenditure is $576 billion, C = $445 billion, I = $115 billion, and G = $81 billion. Instructions: Enter your answer as a whole number. Include a negative sign if appropriate. NX is $ billion. Exports are . revised jrl 06152012

Answer 1

Explanation:

a. Total income formula is:

Y= C+I+G+NX

Y=20.1+3.5+5.2+(-1)

Y= $27.8 billion

b. In closed economies, income is calculated with this formula:

I=Y-C-G

I= 1.5-1-0.8

I= -$0.3 trillion

In open economies, income cannot be calculated because net exports (NX) data is missing.

c. NX is

NX= 576-445-115-81

NX= -$65 billion

NX is exports minus imports, in this case imports are more than exports. To calculate exports you need imports data.