The figure given below represents the leakages and injections in an economy Figu
ID: 1160452 • Letter: T
Question
The figure given below represents the leakages and injections in an economy Figure 10.2 Leakages and Injections (dollars) S+T+M 50 40 30 20 10 HGHEX -10 -20 30 00 400 500 600 700 800 Real GDP (dollars) In the figure: I, 1: Investment; G: Government spending EX, EX: Exports; T: Taxes; and M: Imports According to Figure 10.2, real GDP of $200 indicates a point where: O consumers engage in dissaving. O unplanned inventory changes will be positive. Ototal leakages exceed total injections the economy is in macroeconomic equilibrium. aggregate expenditures exceed total output.Explanation / Answer
a) When the real GDP is at $200 billion the economy is dissaving where the consumption is more and saving is less. The answer is "A".
b) "E"
Point E represents the underutilization of the resources. ITs the point which is below the PPF. Any point below the PPF will be considered as an underutilization point.