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Consider the following economy
Consider the following economy. C = 1000 + 0.8YD T = 0.25Y | = 325 G = 225 X = 450 M = 0.1 In equilibrium, this economy is... a. A net exporter of 450. b. A net exporter of 50. c. There is insufficient information. d. A net importer of 50.
unemployment exists when the skills that employers seek does not match the skills the potential employees have. a. Frictional. b. Cyclical. c. Structural. d. Seasonal.
The aggregate supply curve cannot be... a. Vertical. b. Upward sloping. c. Horizontal. d. Downward sloping.
Expert Solution
Q1) In equilibrium we have,
Y = C(Y-T) + I + G + X - M
=> Y = 1000 + 0.8*(Y - 0.25Y) + 325 + 225 + 450 - 0.1Y
=> Y = 1000 + 0.6Y + 1000 - 0.1Y
=> 0.5Y = 2000
=> Y = 2000*2 = 4000
=> Imports = M = 0.1*4000 = 400
Thus, net exports = X-M = 450 - 400 = 50
Thus, the answer is (b) net exporter of 50
Q2) The answer is (c) structual as structual unemployment is the unemployment that exists when there is a mismatch of skills between the potential workers and the demands of the employer.
Q3) The answer is (d) downward sloping
The aggregate supply can not decrease as the price increases and thus it can not be downward sloping. All other options are incorrect as aggregate supply can be upward sloping or vertical or horizontal.
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