The following table contains data for a hypothetical closed economy that uses the dollar as its currency.
1 answer:
Answer and Explanation:
The computation is shown below:
Here Y denotes GDP
C Denotes the consumption
I denotes the investment
G denotes the government purchase
GDP for Closed economy:
Y = C + I + G
800 = C + 300 + 200
C = 800 - 500 = 300
Consumption (C) = $300 million
National savings = Y - C - G
= 800 - 300 - 200
= $300 million
Private savings = Y - C - T
= 800 - 300 - 260
= $240 million
Public savings = T - G
= 260 - 200
= $60 million
Based on the above calculations, the government is running a budget Surplus as theT is more than G
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Answer:
a) $3
b) $2
c) 1449
Explanation:
Given:
The cost for a carton of milk = $3
Selling price for a carton of milk = $5
Salvage value = $0 [since When the milk expires, it is thrown out ]3
Mean of historical monthly demand = 1,500
Standard deviation = 200
Now,
a) cost of overstocking = Cost for a carton of milk - Salvage value
= $3 - $0
= $3
cost of under-stocking = Selling price - cost for a carton of milk
= $5 - $3
= $2
b) critical ratio =
or
critical ratio =
or
critical ratio = 0.4
c) optimal quantity of milk cartons = Mean + ( z × standard deviation )
here, z is the z-score for the critical ration of 0.4
we know
z-score(0.4) = -0.253
thus,
optimal quantity of milk cartons = 1,500 + ( -0.253 × 200 )
= 1500 - 50.6
= 1449.4 ≈ 1449 units
Answer: b) lower in long-run equilibrium than in short-run equilibrium.
Explanation:
A self regulating economy will try to move to the long run Equilibrium.
From the graph attached you will notice that the Price Level at the point where the Long Run Curve intersects with the Aggregate Demand curve is lower than the point where the Short Run Supply curve intersects with the same Aggregate Supply.
This means that Prices in the long term at equilibrium will be less than prices in the short term at Equilibrium should the Economy be a self regulating type that will move towards a long term Equilibrium.
