National income equilibrium

Question 1

Equilibrium In each of the following questions, assume that the economy is in equilibrium at X. Identify the new equilibrium following the changes given below:

1. Consumer confidence rises.

2. There is better use of new technology leading to cost efficiencies by UK firms.

3. There is a downturn in UK exports to Europe.

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.