What is the mechanism in the economic system that guarantees the saving of the economy will always equal the investment of the economy? You may assume a closed economy in answering the question.
Using a graph representing the market for loanable funds, show and explain what happens to the real interest rate and investment if the Canadian federal government succeeds in running budget surpluses.
Table 1.0 below gives data for the country of Weston
TABLE 1.0
|
YEAR
|
NOMINAL GDP
|
REAL GDP
|
GDP DEFLATOR
|
|
2002
|
3,055
|
|
94
|
|
2003
|
|
3,170
|
100
|
|
2004
|
3,410
|
3,280
|
|
|
2005
|
|
3,500
|
108
|
(i) Complete the above Table 1.0.
(ii) What is the base year for the GDP deflator?
(iii) Calculate the percentage change in nominal GDP, real GDP, and the GDP deflator between 2004 and 2005. Was the increase in nominal GDP due mostly to an increase in real GDP or to an increase in the price level?