Questions on national income

Questions on national income

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 firms.
  3. There is a downturn in an economy’s exports.
  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.