Economics students/ geniuses HELP

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Leah_Phillips
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#1
Report Thread starter 4 years ago
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So basically I’ve been assigned this ‘test’ to do and it’s really quite important and I’m struggling with 4 (probably quite simple questions! Any help It would be soooooo appreciated!

1) there are various factors that can cause the aggregate demand curve to shift. What effect will the following have on the aggregate demand curve: (options: leftward shift/rightward shift/no shift)

• the government reduce interest rates
• higher prices lead to higher inflation

2)
One explanation of the sustained economic growth that has taken place over the last 40 years is sustained increase in labour productivity.

True or false

3) Long-run economic growth occurs because the capacity of the economy has increased. In other words, long run economic growth is driven from the supply side of the economy.

True or false

4)

Calculate GDP and GVA from these figures

Consumer Expenditure- £1050
Government final consumption- £600
Gross domestic fixed capital formation- £500
Exports of goods and services- £850
Imports of goods and services- £950
Taxes on products- £500
Subsidies on products- £50
Net income from abroad- £60
Capital consumption (Depreciation)- £120

GDP- ?????
GVA- ?????

How is this even worked out!

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Leah_Phillips
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How do you even work out question 4?
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TeeEff
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(Original post by Leah_Phillips)
How do you even work out question 4?
Use

GDP=Consumption+Investment+Government Spending+(Exports-Imports)

and

GVA=GDP+Subsidies-Taxes.

You have the figures already, just plug and play!

As for your other questions,

1) If rates are reduced, that decreases the incentive to save. If people don't save, what do they do instead? As for higher inflation (I'm going to assume this is talking about a higher inflation rate than desired because inflation in itself is not necessarily bad), it suggests the cost of living for people goes up. What would happen to the amount you can spend on random stuff like a new textbook, a bag or whatever if you have to spend more on food and rent?

2) If labour is more productive, more can be made by one worker than they could have done so before. Given that labour is a factor of production, what does that suggest will happen to the output of the country?

3) Try plotting out a rightward shift in the LRAS (that's your model of the effect of the supply side of the economy). What happens to Y at a given level of P?

If you need any more help, let us know!
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