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National income equilibrium


Question 1

In each of the following questions, assume that the economy is in equilibrium at X. Identify the new equilibrium following the changes given below:

Equilibrium test
  1. Consumer confidence rises.

  2. There is better use of new technology leading to cost efficiencies by UK firms.

  3. There is a downturn in UK exports to Europe.

  4. There is a rise in household savings.

  5. Interest rates fall.

  6. Consumer confidence falls triggering a fall in business confidence.

  7. Oil prices rise, and at the same time unemployment falls.

  8. There is a general rise in business taxes, and a rise in imports relative to exports.

  9. Government spending on education rises.

  10. Banks reduce their lending to households and firms reduce their investment in new technology.