9. Given that the consumption function is C = 10 + 0.3Yd, where yd is disposable income, while the government imposes a RM10 tax for every RM100 income earned and investment and government expenditure are 30 and 20 respectively. Compute the national income equilibrium using aggregate expenditure approach a.47.24 b.82.19 c.53.22 d.75.98
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- QUESTION 36 40 36 32 28 24 20 16 12 8 4 0 O b) 3/2 c) 2/3 d) 1/3 E,Q E O e) 3 16 24 36. What is the value of the "simple income multiplier" for autonomous spending? a) zero 32 40 o AE SQuestion 46 Assume that the MPC is 0.70. What is the income multiplier? Question 46 options: a) 0.3 b) 3.33 c) 4 d) 2The formula for the government spending multiplier is A) 1/(1+ MPC). B) 1/MPS. O C) 1/MPC. O
- 18. What will be the level of consumption spending at an income level of 36? a) 30 b) 24 c) 28 d) 16 e) 8Solve for (i) Equilibrium income and (ii) Income-expenditure multiplier for GQuestion 5/ 25 If government spending decreased by $500. Given that c= 100+0.75y and the initial income is S5000, the new equilibrium income is: 1. O$7000 2. Os1600 3. O$3000 4. Os6600
- Please no written by hand and no emage Suppose that in the economy under consideration the consumption function can be written as C = 200 + .8(Y – T). Furthermore, you know that taxes are autonomous and equal to $10. Now, suppose that investment spending is equal to $50 at every level of disposable income and government spending is constant and equal to $100 at every level of disposable income, suppose that (X – M) is constant and equal to $20 at every level of disposable income. (a)Draw a graph of the consumption function with respect to disposable income. Measure/show consumption spending on the vertical axis and disposable income on the horizontal axis (b) Calculate equilibrium national income Ye from the information given. (c) From the information given above is the government running a deficit or surplus budget? Explain why. (d) Full employment output in this economy (Yf) is equal to $2000 what do you predict is happening to inventories if the full employment level of output is…15) Given the income and consumption data shown in the table below, what is the spending multiplier ?1. Suppose the households in a hypothetical economy has the following consumption function C= a + cYd. Where is the disposable income. The government in this economy imposes a tax rate of to households’ income (ex. A means that 10% of households’ income goes to tax payments). a. What is the equation that describes the disposable income of households? b. What is the Planned Expenditure Equation? Assume that government expenditure is exogenous and Investment function is given by the equation I = I-br Where is the interest rate. c. Derive the equilibrium output in the goods market and show that the multiplier in this model is 1/1c(1-t). d. How does and the tax rate affects this multiplier (e.g., what happens to multiplier if c increases cet.par. , or if tax rate increases, cet.par)?
- . Suppose an economy is represented by the following equations.Consumption function C = 100 + 0.8YdPlanned investment I = 38Government spending G = 75Exports EX = 25Imports IM = 0.05YdAutonomous Taxes T = 40Planned aggregate expenditure AE = C + I + G + (EX - IM)a. By using the above information calculate the equilibrium level of income for thiseconomy. b. Calculate the value of expenditure multiplier. c. Suppose that government spending is increased by 5, what will happen to theequilibrium income level?Given the following consumption function, C = 400 + 0.75YD,where C= consumption expenditure, YD = disposable income, Investment= $1200, Government spending = $1600,Exports = $500, Imports = $600, Taxes = $1200 and Potential GDP = $9000Choose corrcct optiona) Aactual output is less than potential outputb) actual output is zeroc) actual output is equal to potential outputd) actual output is higher than potential outputAssume autonomous consumption is Gh¢ 400 million, autonomous investment is Gh¢ 300 million and marginal propensity to consume is 75%. Use income expenditure approach to calculate; I) the equilibrium national income Ii) the multiplier III) assume further that autonomous investment changes to Gh¢ 700, find the new equilibrium national income
