this is a table with some questions and i don't know how to solve it
-------------table--------------------
(1)real domestic output (GDP=DI) in billions
$200
$250
$300
$350
$400
$450
$500
$550
(2)aggregate expenditures private closed economy billions
$240
$280
$320
$360
$400
$440
$480
$520
(3)exports billions
$20
$20
$20
$20
$20
$20
$20
$20
(4)imports billions
$30
$30
$30
$30
$30
$30
$30
$30
(5)net exports private economy
--
--
--
--
--
--
--
--
(6)aggregate expenditures open,billions
--
--
--
--
--
--
--
--
--
--------------------------------------
the 1st question is use columns 1 and 2 to determine the equilibrium GDP for this hypothetical economy.
2.fill in columns 5 and 6 to determine the equilibrium GDP for the open economy.
3. Given the original $20 billion level of exports, what would be the equilibrium GDP if imports were $10 billion greter at each level of GDP?
4. What is the multiplier in this example?
To solve these questions, you need to understand the concepts of equilibrium GDP, net exports, and the multiplier.
1. Determining the Equilibrium GDP for the Closed Economy:
To find the equilibrium GDP for the closed economy, you need to compare the real domestic output (GDP=DI) and the aggregate expenditures. The equilibrium occurs when these two values are equal.
In this case, the real domestic outputs in column 1 are given as $200, $250, $300, $350, $400, $450, $500, $550, and the aggregate expenditures in column 2 are given as $240, $280, $320, $360, $400, $440, $480, $520.
To determine the equilibrium GDP, locate the point at which the values in columns 1 and 2 are equal. In this case, it is when the GDP is $400 as both columns have the same value. So, the equilibrium GDP for the closed economy is $400 billion.
2. Determining the Equilibrium GDP for the Open Economy:
To determine the equilibrium GDP for the open economy, you need to consider net exports, which is calculated as exports minus imports.
In this case, net exports are symbolized as "--" in column 5. To fill in column 5, subtract the values in column 4 (imports) from the values in column 3 (exports). The value in each row will be $20 - $30 = -$10 billion.
Next, for column 6, add the values in column 2 (aggregate expenditures) with the values in column 5 (net exports). This will give you the aggregate expenditures for the open economy.
For example, at the equilibrium GDP of $400, the aggregate expenditures are $400 (column 2) + (-$10) (column 5) = $390 billion. Fill in column 6 similarly for other rows.
3. Determining the Equilibrium GDP with Increased Imports:
To find the equilibrium GDP when imports are $10 billion greater at each level, you need to increase the values in column 4 (imports) by $10 while keeping other columns constant.
For example, at the equilibrium GDP of $400 with original imports of $30 billion, the new imports would be $40 billion. Calculate the net exports using the updated imports and exports values, and then find the equilibrium GDP following the same procedure mentioned in step 2.
Repeat this process for all rows to determine the equilibrium GDP at each level with the increased imports.
4. Determining the Multiplier:
The multiplier represents the relationship between a change in autonomous expenditures (aggregate expenditures that are not influenced by changes in GDP) and the resulting change in equilibrium GDP. It measures the amplified effect of changes in aggregate expenditures on the overall economy.
To find the multiplier in this example, you need to identify the change in equilibrium GDP resulting from a change in autonomous expenditures. In this case, autonomous expenditures are not explicitly given, but they can be inferred from columns 1 and 2.
For instance, at the equilibrium GDP of $400, the associated autonomous expenditure is $400 billion (from column 2). To find the multiplier, divide the change in equilibrium GDP by the change in autonomous expenditures. However, since the data does not provide a clear change in autonomous expenditures, you may need to make certain assumptions or provide additional information to determine the multiplier accurately.
Note: The multiplier formula is given as ∆GDP = (1 / (1 - MPC)), where MPC represents the marginal propensity to consume and can be calculated using the change in aggregate expenditures (∆AE) divided by the change in GDP (∆GDP). However, the data provided does not directly provide all the required values to determine the multiplier using this formula.