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Problem A Use the national income data in the table below to compute the following: 1. GDP. 2. NDP. 3. NI. National Income Data National Income Accounting Data Amount (billions) Compensation of employees $288.2 US exports of goods and services 63.4 Consumption of fixed capital 23.6 Government purchases 188.8 Taxes on production and imports 28.8 Net private domestic investment 104.2 Transfer payments 27.8 US imports of goods and services 33.0 Personal taxes 81 Net foreign factor income 4.4 Personal consumption expenditures 438.2 Statistical discrepancy 0 Problem B Compare a $40,000 income in 1980 to 2010 and analyze the following questions: • What are the differences in the available products? • What are the differences in the quality of products? • If you made $40,000 in 1980 and in 2010, what would your income status or wealth be in each time period? • In which period would you choose to live, and why? Problem C • In the aggregate demand model in equilibrium, GDP (Y) = C + I + X (open economy). • Where C = consumption schedule = 100 + .75Y (consumption is a function of income). • Where I = planned investment = 20 and X = net exports = 40. Both are independent of GDP (Y). Use the information provided above to complete the following: 1. Calculate the equilibrium level of income or real GDP for this economy. 2. What happens to equilibrium Y if Ig changes to 15? What does this outcome reveal about the size of the multiplier? Problem D 1. Suppose the consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy’s multiplier is 4. If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by 2 percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? In what direction and by how much will it eventually shift? 2. Use the hypothetical economy in the table below to calculate the aggregate demand and supply, as well as its price level. 3. Given the above information, in this hypothetical economy what is the equilibrium price level and the equilibrium level of real output? Using Excel, graph both the aggregate demand and aggregate supply curves. 1. Can there be equilibrium level of output at below full employment? 2. At what price level will aggregate supply equal aggregate demand? At what price level will demand fall below aggregate supply? Given a price level of 250 will aggregate demand exceed supply? 3. If the aggregate demand schedule shifted by $20 billion to the right at every level, what would be the new equilibrium level of income? Hypothetical Economy Amount of Real GDP Demand (in billions) Price Level (Price Index) Amount of Real GDP Supplied (in billions) $180 300 $500 260 250 400 300 200 300 420 150 200 560 100 100 Read the Problem Preparation and Submission Guidelines linked in the resources before submitting your assessment.

Problem A
Use the national income data in the table below to compute the following:
1. GDP.
2. NDP.
3. NI.

National Income Data
National Income Accounting Data Amount (billions)
Compensation of employees $288.2
US exports of goods and services 63.4
Consumption of fixed capital 23.6
Government purchases 188.8
Taxes on production and imports 28.8
Net private domestic investment 104.2
Transfer payments 27.8
US imports of goods and services 33.0
Personal taxes 81
Net foreign factor income 4.4
Personal consumption expenditures 438.2
Statistical discrepancy 0
Problem B
Compare a $40,000 income in 1980 to 2010 and analyze the following questions:
• What are the differences in the available products?
• What are the differences in the quality of products?
• If you made $40,000 in 1980 and in 2010, what would your income status or wealth be in each time period?
• In which period would you choose to live, and why?
Problem C
• In the aggregate demand model in equilibrium, GDP (Y) = C + I + X (open economy).
• Where C = consumption schedule = 100 + .75Y (consumption is a function of income).
• Where I = planned investment = 20 and X = net exports = 40. Both are independent of GDP (Y).
Use the information provided above to complete the following:
1. Calculate the equilibrium level of income or real GDP for this economy.
2. What happens to equilibrium Y if Ig changes to 15? What does this outcome reveal about the size of the multiplier?
Problem D
1. Suppose the consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy’s multiplier is 4. If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by 2 percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? In what direction and by how much will it eventually shift?
2. Use the hypothetical economy in the table below to calculate the aggregate demand and supply, as well as its price level.
3. Given the above information, in this hypothetical economy what is the equilibrium price level and the equilibrium level of real output? Using Excel, graph both the aggregate demand and aggregate supply curves.
1. Can there be equilibrium level of output at below full employment?
2. At what price level will aggregate supply equal aggregate demand? At what price level will demand fall below aggregate supply? Given a price level of 250 will aggregate demand exceed supply?
3. If the aggregate demand schedule shifted by $20 billion to the right at every level, what would be the new equilibrium level of income?

Hypothetical Economy
Amount of Real GDP Demand (in billions) Price Level (Price Index) Amount of Real GDP Supplied (in billions)
$180 300 $500
260 250 400
300 200 300
420 150 200
560 100 100
Read the Problem Preparation and Submission Guidelines linked in the resources before submitting your assessment.
• Assessment Instructions
Complete each of the following economic problems.
Problem A
Use the national income data in the table below to compute the following:
1. GDP.
2. NDP.
3. NI.

National Income Data
National Income Accounting Data Amount (billions)
Compensation of employees $288.2
US exports of goods and services 63.4
Consumption of fixed capital 23.6
Government purchases 188.8
Taxes on production and imports 28.8
Net private domestic investment 104.2
Transfer payments 27.8
US imports of goods and services 33.0
Personal taxes 81
Net foreign factor income 4.4
Personal consumption expenditures 438.2
Statistical discrepancy 0
Problem B
Compare a $40,000 income in 1980 to 2010 and analyze the following questions:
• What are the differences in the available products?
• What are the differences in the quality of products?
• If you made $40,000 in 1980 and in 2010, what would your income status or wealth be in each time period?
• In which period would you choose to live, and why?
Problem C
• In the aggregate demand model in equilibrium, GDP (Y) = C + I + X (open economy).
• Where C = consumption schedule = 100 + .75Y (consumption is a function of income).
• Where I = planned investment = 20 and X = net exports = 40. Both are independent of GDP (Y).
Use the information provided above to complete the following:
1. Calculate the equilibrium level of income or real GDP for this economy.
2. What happens to equilibrium Y if Ig changes to 15? What does this outcome reveal about the size of the multiplier?
Problem D
1. Suppose the consumer spending initially rises by $5 billion for every 1 percent rise in household wealth and that investment spending initially rises by $20 billion for every 1 percentage point fall in the real interest rate. Also assume that the economy’s multiplier is 4. If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by 2 percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? In what direction and by how much will it eventually shift?
2.Use the hypothetical economy in the table below to calculate the aggregate demand and supply, as well as its price level.
3. Given the above information, in this hypothetical economy what is the equilibrium price level and the equilibrium level of real output? Using Excel, graph both the aggregate demand and aggregate supply curves.
1. Can there be equilibrium level of output at below full employment?
2. At what price level will aggregate supply equal aggregate demand? At what price level will demand fall below aggregate supply? Given a price level of 250 will aggregate demand exceed supply?
3. If the aggregate demand schedule shifted by $20 billion to the right at every level, what would be the new equilibrium level of income?

Hypothetical Economy
Amount of Real GDP Demand (in billions) Price Level (Price Index) Amount of Real GDP Supplied (in billions)
$180 300 $500
260 250 400
300 200 300
420 150 200
560 100 100
Read the Problem Preparation and Submission Guidelines linked in the resources before submitting your assessment.

The work must answer the the “distinguished” criteria (Below)

Economic Problems 4 Assessment Scoring Guide
Economic Problems 4 Assessment Scoring Guide Grading Rubric
Criteria Non-performance Basic Proficient Distinguished
Analyze Gross Domestic Product (GDP), Net Domestic Product (NDP), and National Income (NI) using appropriate data. Does not compute Gross Domestic Product (GDP), Net Domestic Product (NDP), and National Income (NI) using appropriate data. Computes Gross Domestic Product (GDP), Net Domestic Product (NDP), and National Income (NI) using appropriate data. Analyzes the Gross Domestic Product (GDP), Net Domestic Product (NDP), and National Income (NI) using appropriate data. Interprets the solution and analysis of Gross Domestic Product (GDP), Net Domestic Product (NDP), and National Income (NI) using appropriate data to make decisions.
Analyze past and present value of income, available products, and quality of products. Does not identify past and present value of income, available products, and quality of products. Identifies past and present value of income, available products, and quality of products. Analyzes past and present value of income, available products, and quality of products. Interprets the analysis of past and present value of income, available products, and quality of products to form assumptions.
Analyze aggregate demand and supply and graph the results. Does not compute the aggregate demand and supply and does not graph the results. Computes the aggregate demand and supply and graphs the results incorrectly. Analyzes how price levels affect aggregate supply and aggregate demand. Interprets how price levels affect aggregate supply and aggregate demand using supporting relevant data, resources, references, and economic principles.
Analyze solutions with support from relevant data, resources, references, and economic principles. Does not identify solutions with support from relevant data, resources, references and economic principles. Identifies solutions using appropriate data, resources, references, and economic principles. Analyzes solutions with support from relevant data, resources, references, and economic principles. Interprets solutions using relevant data, resources, references, and economic principles with correct data and written work to support conclusions.
Communicate in a manner that is professional and consistent with expectations for members of the business professions. Communicates in a manner that is not professional or consistent with expectations for members of the business profession. Communicates in a manner that is inconsistent with expectations for members of the business profession. Communicates in a manner that is professional and consistent with expectations for members of the business professions. Communicates in a manner that is professional, scholarly, and consistent with expectations for members of the business professions. Adheres to APA guidelines; work is appropriate for publication.

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