Introduction to Economics 2 Deneme Sınavı Sorusu #349590

To calculate the total change in income or GDP, what should be known?


The change in consumption

 

The change in transfer payments

 

The size of marginal propensity

 

The cost of capital goods

The ratio of unspent income increase


Yanıt Açıklaması:

In order to find out the total effect of 100 TL income increase in the first stage, we need to calculate the increase in income and consumption in every stage and add up these figures. Although the amount of increase in income and consumption decreases at every stage, they never reach to zero in mathematical terms. Therefore, it doesn’t seem possible to make necessary calculations for every stage and add up these values. However, we can apply a simple methodology to figure out the total increase in income and expenditures. If we know the ratio of unspent (leaked) income increase for domestically produced goods and services, by using its reciprocal, we can easily calculate the total change in income or GDP.

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