Answer to Question #48092 in Macroeconomics for Rosalind
• What is Country A’s GDP?
• What is the composition of GDP by percentage?
• What is the GDP per capita?
• How does this relate to Keynesian economics?
• Country A’s GDP is: GDP = Consumption (C) + Investment (I) + Government purchases (G) + Net export (EX - IM) = 90,000 + 10,000 + 25,000 + (65,000 - 50,000) = 140,000 cars.
• The composition of GDP by percentage is: consumption - 64%, investment - 7%, government purchases - 18%, net exports - 11%.
• The GDP per capita is GDP/Population = 140,000/500,000 = 0.28 car per person.
• Keynesian economics is the view that in the short run, especially during recessions, economic output is strongly influenced by aggregate demand (total spending in the economy). In the Keynesian view, aggregate demand does not necessarily equal the productive capacity of the economy; instead, it is influenced by a host of factors and sometimes behaves erratically, affecting production, employment, and inflation.
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