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Economics Tutorial for Students

This document contains a tutorial for EC1301 Principles of Economics Sem 1 AY 2017/18. It includes: 1. Questions about calculating marginal propensity to consume, expenditure multiplier, and equilibrium GDP using data in a table. 2. Questions about calculating changes in real GDP resulting from changes in government purchases and taxes, assuming a marginal propensity to consume of 0.95. 3. Questions about calculating real debt, real GDP, and debt-to-GDP ratios in 1990 and 2000 for a country given data on nominal debt, nominal GDP, and price indexes.

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178 views1 page

Economics Tutorial for Students

This document contains a tutorial for EC1301 Principles of Economics Sem 1 AY 2017/18. It includes: 1. Questions about calculating marginal propensity to consume, expenditure multiplier, and equilibrium GDP using data in a table. 2. Questions about calculating changes in real GDP resulting from changes in government purchases and taxes, assuming a marginal propensity to consume of 0.95. 3. Questions about calculating real debt, real GDP, and debt-to-GDP ratios in 1990 and 2000 for a country given data on nominal debt, nominal GDP, and price indexes.

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meiling_1993
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© © All Rights Reserved
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EC 1301 Principles of Economics Sem 1 AY 2017/18 LY Mun

EC1301 Tutorial 8 (Week 11)

1. Use the information in the table below to answer the following questions:

Real GDP C Ip G NX
7000 6100 400 1000 500
8000 6900 400 1000 500
9000 7700 400 1000 500
10000 8500 400 1000 500
11000 9300 400 1000 500
12000 10100 400 1000 500
13000 10900 400 1000 500

(a) What is the marginal propensity to consume implicit in these data?


(b) What is the numerical value of the expenditure multiplier for this economy?
(c) What is the equilibrium level of real GDP?
(d) Draw the aggregate expenditure line for this economy and show the equilibrium GDP
graphically.

2. Calculate the changes in real GDP that would result in each of the following cases
(assuming simple multipliers, with no automatic stabilizers or destabilizers):
(a) Government purchases rise by $7.5 billion and MPC is 0.95.
(b) Taxes fall by $7.5 billion, and MPC is 0.95.

3. Suppose a country has the following statistics, in billions of units of currency for the years
shown.
Nominal national debt in 1990 1.2
Nominal national debt in 2000 13.8
Nominal GDP in 1990 101.7
Nominal GDP in 2000 552.2
Price index in 1990 35.2
Price index in 2000 113.3

(a) Calculate the countrys real debt and real GDP in 1990 and 2000.
(b) Calculate real debt as a percentage of real GDP in 1990 and 2000.
(c) Calculate nominal debt as a percentage of nominal GDP in 1990 and 2000.

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