The following data gives dollar amounts for the circular flow of a major nation in the year of 2011. All numbers are in billions of US dollars, meaning anything a thousand in the table really represents a trillion.
You will need this data to calculate the remaining numbers in the circular flow. Be sure you are using the circular flow as explained in the Jim’s Guide- Closer Look tutorials/diagrams.
|Line||2011 annual ($billions)|
|b.||Savings by Households||539|
|e.||Government spending on goods/services||3154|
|h.||Gov't Deficit financed by borrowing||1380|
TO COMPLETE THE WORKSHEET, go to your Learning Management System (D2L at LCC) and complete the “quiz” labeled Unit 2 Worksheet.
- Be sure to use the Circular Flow diagram I provided.
- Remember that in any market, the total value of what’s being sold is also the total value of what’s been bought. This means in circular flow terms that the money-flowing-into a market must equal the money-flowing-out-of the market.
- Remember that for firms and households (always) and for ROW (usually) and for government (by choice), a budget constraint exists. This means that the money-into must equal the money-out-of.
- Pay attention to formatting.
There are 10 questions. This is a preview of the questions here. You enter your actual answers and have them graded in the learning management system. The first 8 questions are short-answer and the last two are multiple choice.
- What is the value of “Net Exports”?
- What is the amount of GDP?
- The largest component of GDP is consumer spending. What percentage of GDP is consumer spending? (round off and format your answer as: 99% )
- What is the value of government transfers to households?
- What is the value of Capital Inflow from R.O.W.?
- What is the value of the net Capital flow between the U.S. and the R.O.W? (enter your number as a net capital inflow, meaning Capital Inflow – Capital Outflow)
- There is an item listed in the data that is a negative but it is “normally” a positive number. What is it? (enter the name exactly as listed in the table)
- One way to measure (among many) the relative size of the government sector in an economy is to divide the total government spending by the GDP. In rounded percentage terms, what is the size of government spending compared to the GDP? (format your answer as rounded percentage, ex: 99%)
- In the previous question you identified an item which is “normally” positive but in this particular year was negative. Which of the following explanations most likely explains what happened this year? (multiple choice question)
- The value of net exports (you already calculated it) is a negative. This means that the rest of world was paid money (US dollars) for selling goods and services to the U.S.(imports). They used some of that money to buy goods and services from the U.S. (exports). This means the R.O.W. had money left over from selling imports that they didn’t use to buy our exports. What did they do with this money? (multiple choice question)
Directions: After calculating the empty Then answer the questions about this worksheet in your school’s learning management system. (Moodlerooms at HFCC).