Problem
Expert econometricians in the Republic of Yuck estimate the following:
Real GNP (Y) . . . . . . . . . . . . . . . . . . . . . . 200 billion Yuck dollars
Planned investment spending . . . . . . . . . 75 billion Yuck dollars
Yuck is a simple economy with no government, no taxes, and no imports or exports. Yuckers (citizens of Yuck) are creatures of habit. They have a rule that everyone saves exactly 25 percent of income. Assume that planned investment is fixed and remains at 75 billion Yuck dollars.
You are asked by the business editor of the Weird Herald, the local newspaper, to predict the economic events of the next few months. By using the data given, can you make a forecast? What is likely to happen to inventories? What is likely to happen to the level of real GDP? Is the economy at an equilibrium? When will things stop changing?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.