b+I+G-aT 1-a The reduced form of a macroeconomic model is Y = constant values of investment and taxation respectively. If I=300, G = 100, T=300, a = 0.8, and b =50 work out the [answer nearest integer values] (a) current level of national income, Y. (b) values of the investment multiplier (c) rise in national income due to a 3.0 unit decrease in taxation is (d) The value of the taxation multiplier is where I and T' denote the

b+I+G-aT 1-a The reduced form of a macroeconomic model is Y = constant values of investment and taxation respectively. If I=300, G = 100, T=300, a = 0.8, and b =50 work out the [answer nearest integer values] (a) current level of national income, Y. (b) values of the investment multiplier (c) rise in national income due to a 3.0 unit decrease in taxation is (d) The value of the taxation multiplier is where I and T' denote the

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Example For an economy the following data is given : Consumption (C) Investment (I) 100 + 0.8 Y. %3D 150 75 Government Expenditure (G) Rate of income tax (T) %3D 0.25Y (a) Find the equilibrium level of incomę. (b) What is the value of multiplier with tax and without tax ?
(d) Suppose government spending increases by some amount AGo to become Go+AGo. Show the change in Y and C as a response to this increase in spending.
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regate Expenditures Model Assignment i 7 S Book Your research into a nation has yielded the following information: Autonomous expenditure (A) = $2,500 Government purchases (G) = $2,400 Gross investment (1) = $2,000 Net exports (NX) = -$800 Taxes (T) = $1,900 - MPC = 0.8 Saved Instructions: Round your answers to nearest whole number. For the coefficient to Y, round your answer to two decimal places. a. Substitute the values above into the equation: AE = A + [MPC × (YT)] +I+G+ NX to determine the abbreviated equation for aggregate expenditures (AE). Print erences AE = Y b. Using the abbreviated equation you computed in part a, complete the table below. Aggregate Real GDP Expenditures (Y) (dollars) 7,000 14,000 21,000 (AE) (dollars) $ c. Knowing that AE = Y at the equilibrium level of output, what is the equilibrium level of output for this nation? Ye: $ d. What is the expenditures multiplier for this economy? e. If government purchases increase by $1,600, from $2,400 to $4,000, what is…