‘Aggregate Demand and Supply and Macroeconomic Problems 11, Position each of the folowing elght terms In the UK's craular flow of Income diagram below: Consumption (of domestically produced goods and services); Net saving; Net taxation; Government expenditure; Factor Payments (national Income); Expenditure on imports; Investment; Expenditure on exports. Economists use speciic letters to label each of these terms. The letters used are: 516, X Mh Cy TY ‘Add the correct letter to each of the terms you have writen on the dlagram. Ns 22S 2 Which ofthe following are changes in injections Into, and which are changes in withdrawals from the UK‘s circular fow of Income? In each case, Kenty whether the change i an Increase ora decrease. In each case, assure that this tre only change. (Delete wrong words) “ 2. Acouncl funds the building of new libraries. Withdrawal/Injection. Incrense/Decrease b. The government raises tax-free thresholds, Withdrawal/Injection. Increase /Decrease i & The government reduces child beneft. Withdrawal/Injection. ncrease/Decrease 4. Fewer toursts visi the UK. Withdrawal/Injection. Increase/Decrease j tng 2 rise in consumer demand, borrow more money in order to bulld up thelr stocks. 7 Withdrawal/injection. Increase/Decrease f. Consumers demand mare goods that are domestialy produced (but total consumption does not change). ‘Withdrawal/Injection. Increase/Decrense 9. People Invest more money in banks and bulling societies. Withdrawal/Injection. Increase /Decrease 3. What wil happen te the level ofthe Us national income ithe folowing changes occur? (in each case, assume other things rerrain unchanged.) 2. Finns are encours Information by lower interest rates to build new factories. Rise / Fall / Impossible to tell without more ». Consumers abroad are deterred by 2 high price for the pound from buying Imports from the UK. Rise / Fall / {Impossible to tell without more information € Both taxation and government expenditure are reduced, Rise / Fail / Impossible, fertell without more Information 6. People decde to save a larger proportion of thelr Income. Rise / Fall / Impossible to tell without more information ©. Our trading partners overseas begin to recover from recession Rise / Fall / Impossible to tell without more Information’ 4. What would be the effect of each of the following events on actual changes take place) 2. Areduction In the level of Investment, Actual growths rise / fal / no effect. Potential growth: rise / fall / no effect. . People save a larger proportion of thelr income. Actual growth: rise / fall / no effect. Potential growth: rise / fall / nd potential economic growth? (Assume no other © Areducton in the workdng week. Actual growth: Hse / fall / no effect, Potential growth: rise / fall / no effect, 4. Inceased expenditure on education and training. Actual growth: rise / fall / no effect. Potential growth fice / fall /no effect. The dhcovery of new more efient techniques which could beneft Industry generaly, Actual rowth: rise / fall / no ‘effect Potential growth: ise / fall / no eicect. Areduction In interest rates. Actual growth rise / fall / no effect. Potential growth: ize / fall /no effec Scanned with CamScanner