Questions on national income

National income equilibrium

Question 1

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 firms.
3. There is a downturn in an economy’s exports.
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.