Macroeconomics - Coursework Example

Assignment and Sur The following figure shows a Withdrawls and an Injections function: a. How much is the nationalincome at the equilibriumThe equilibrium point for the lines W and J is at point P. This is the point where the lines intersect. Therefore, the National Income based on the presented chart is a total of OB since W=J.b. Assume that the current level of national income is OA. Describe the process whereby equilibrium will be achieved.If national income level is OA, the equilibrium, in this case, will be achieved through an upward shift of the withdrawals curve, W given that the injections curve is horizontally fixed and inelastic along that line.

This is an indication of the excess in the injections than the withdrawals. This will result in a movement towards point P, due to the extra net expenditures (J-W). Consequently, producers will be invigorated to increase their output; thus, leading to higher national income levels (Carlin & Soskice, 2006). With the increase in income, the withdrawals level (movement along the W curve) will carry on until W=J. Upon shifting the curve W, the new equilibrium point will likely be at R. This is an indication of injection of income into the market cycle by either the households or the government through various spending activities.c. If withdrawals exceed injections what effect will this have on the economy?

An excess in the withdrawals more than the injections will imply that there shall be less investments. Consequently, an excess in the withdrawals implies that households are saving some of their income and not spending it; thus, leading to a reduction in the circular flow of income (Carlin & Soskice, 2006).d. Illustrate on the figure the effect of an increase in government spending by an amount UT.An increase in the government spending would imply increase in injections that would result in an upward shift by UT.

Equilibrium will now be attained at point U being the point where the new injections curve will intersect with the withdrawals curve (Carlin & Soskice, 2006). As a result, there will be a rise in the national income by an amount of BC denoted by J’.2. a. Find data for nominal GDP at US dollar current prices with a base year of your choice and calculate real GDP for Australia, France, Germany, Greece, Ireland, Japan, UK, and USA from 2005 to 2014. Present the data on a table.According to the World Bank statistics, the nominal GDP for US dollar current prices at 2010 was 14,960,000,000.

CountryUS Nominal GDP at 2013 as base yearCountry specific real GDP over the years 2005-20142005200620072008200920102011201220132014Australia ($’000’)14,960,000993,2001,022,8401,061,3901,100,6301,119,8101,141,7901,167,3601,209,5601,241,7401,282,710France ($’000’)14,960,0002,487,9602,549,3302,607,5902,605,4802,523,4902,567,0102,619,0402,619,4102,625,0102,635,730Germany($‘000’ )14,960,0003,096,4903,211,0603,316,0303,351,9503,179,4703,307,0503,417,2803,440,8203,455,6803,510,970Greece($‘000’ )14,960,000293,390309,540320,490319,800309,770294,460273,530254,460244,650248,290Ireland($‘000’ )14,960,000208,780220,270231,220226,230211,780209,530214,080214,410213,680224,110Japan($‘000’ )14,960,0005,401,6405,493,0805,613,5005,555,0305,248,0005,492,1405,467,2805,546,4005,631,7805,641,220UK($‘000’ )14,960,0002,257,9102,320,1102,399,6302,381,1602,258,0502,295,5202,321,1702,327,6202,366,3102,437,650USA($’000’)14,960,00014,408,00014,792,23015,055,31015,011,48014,594,75014,964,31015,204,00015,556,86015,902,12016,271,050b.

Work out the growth rate for each country for each year from 2005 to 2012.GDP Growth Rate for each countryAustralia = 1,209,560 - 993,200 x 100% = 21.78% 993,200France = 2,619,410 - 2,487,960 x 100% = 5.283% 2,487,960Germany = 3,440,820 - 3,096,490 x 100% = 11.12% 3,096,490Greece = 254,460 - 293,390 x 100% = -13.27% 293,390Ireland = 214,410 - 208,780 x 100% = 2.696% 208,780Japan = 5,546,400 - 5,401,640 x 100% = 2.68% 5,401,640UK = 2,327,620 - 2,257,910 x 100% = 3.087% 2,257,910US = 15,556,860 - 14,408,000 x 100% = 7.

974% 14,408,000c. Plot the figures on a graph. What patterns do you observe?When the above figures for the real GDP growth rates are plotted on a bar graph, the following trends are observed.ReferenceCarlin, W., & Soskice, D. W. (2006). Macroeconomics: imperfections, institutions, and policies. Oxford [u.a.], Oxford Univ. Press.