Tag: national income identity for open economy

Questions Related to national income identity for open economy

In an open economy GDP is composed of _______.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. consumption, government spending

  2. gross investment

  3. net exports

  4. sum of all

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Correct Option: D
Explanation:

In an open economy the GDP is calculated as the sum of the 4 sectors of the economy. 

GDP = C + I + G + (X-M) 
         =Consumption + Investment + Government spending + Net exports

In an open economy GDP is the sum of ________.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. Consumption, Gross Investment, Government expenditure, Net export

  2. Consumption, Gross Investment, Government expenditure, Net import

  3. Consumption, Gross Investment, Government subsidy, Net export

  4. Consumption, Gross Investment, Net export, Personal saving

Show answer
Correct Option: A
Explanation:

The GDP is calculated using the formula

 $GDP = C + I + G + X - M$ 

Where: 
C = Consumption
I = Gross Investment
G = Government expenditure
X-M = Net export

DEPB stands for _______.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. Daily Export Pass Book

  2. Duty Exemption Pass Book

  3. Duty Entitlement Pass Book

  4. Double Export Pass Book

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Correct Option: C

From the following equation estimate consumption when disposal income $Y _d$ is Rs.1000.
$C _0$=Rs. 200+0.80Y$ _d$

$C _1$= consumption
Y$ _d$= disposable income

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. Rs. 1000

  2. Rs. 1100

  3. Rs. 900

  4. Rs. 800

Show answer
Correct Option: A
Explanation:

Given that $Y _d= 1000$


$C = C _0+ C _1Y _d$
$C = 200 + 0.8 * 1000$
$C = 200 + 800$
$C = 1000$
 

EOU stands for ______.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. Export Oriented units

  2. European Oil Union

  3. Export Oil Unity

  4. Excellent Official Unit

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Correct Option: A
Explanation:

 The Export Oriented Units (EOU) scheme was introduced to boost exports, increase foreign earnings and created employment in India. The EOU scheme is complementary to the scheme for Free Trade Zone, Export Processing Zone.

If supply of X products increases due to heavy imports, this will lead to ___________.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. increase in equilibrium quantity

  2. increase in equilibrium price

  3. decrease in equilibrium price

  4. decrease in equilibrium quantity

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Correct Option: D

Net exports are negative when __________.

national income identity for open economy open economy macroeconomics determination of income and employment economics

  1. net investment is positive

  2. exports are exceeded by imports

  3. exports exceed private transfer to foreigners

  4. imports are exceeded by exports

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Correct Option: B