question archive An economy is represented by the following set of equations: Y = C + I C = 80m + 1
An economy is represented by the following set of equations: Y = C + I C = 80m + 1
Subject:AccountingPrice: Bought3
An economy is represented by the following set of equations: Y = C + I
C = 80m + 1.6Y where
Y represents aggregate expenditure
C represents consumption expenditure by households
I represents investment expenditure by firms M is millions of Ghana cedis
(a) (i) Explain why the model is not an open economy?
(ii) Explain investment expenditure (I) as used in the model.
(b) Using the consumption function, estimate the autonomous consumption; marginal propensity to consume (MPC) and the multiplier. (6 marks)
(c) Given that the value of Investment (I) is GH?100m calculate equilibrium
(i) Estimate the aggregate expenditure (Y)
(ii) Consumption expenditure (C)
(iii) Aggregate saving (S)
(d) The following is an extract from the national income data of a country in 2020. Study the extract and answer the questions that follow: The agricultural sector in 2020 produced foodstuffs, livestock, coffee and groundnuts worth GH? 1,151 million. Manufacturing, construction, mining, water and electricity produced GH? 1,035 million. Transport and communication, finance, insurance and government services contributed GH? 1,170 million. Farmers received GH? 350 million as subsidies while government collected GH? 390 million in indirect taxes. GHC150 million worth of capital was estimated to have been used up.
Required:
i. Determined the country's Gross Domestic Product in market prices.
ii. Calculate the Net Domestic Product at factor cost.
iii. What method of estimating the national income is used in the extract?
