Economics and National Income

1160 WordsMar 6, 20135 Pages
Answers to End-of-Chapter Questions in Chapter 17 1. An economy is currently in equilibrium. The following figures refer to elements in its national income accounts. | |£ billions | |Consumption (total) |60 | |Investment |5 | |Government expenditure |8 | |Imports |10 | |Exports |7 | (a) What is the current equilibrium level of national income? (b) What is the level of injections? (c) What is the level of withdrawals? (d) Assuming that tax revenues are £7 billion, how much is the level of saving?…show more content…
4. Construct a table similar to Table 17.2 (on page 477), only this time assume that the mpcd is ¾. Show that national income will increase by £640 million. Table 16.1(a) The multiplier round: original table in text ————————————————————— Period (J (Y (Cd (W (£m) (£m) (£m) (£m) ————————————————————— 1 160 160 80 80 ( 2 – 80 40 40 ( 3 – 40 20 20 ( 4 – 20 10 10 ( 5 – 10 5 5 ( 6 – 5 . . . . . . ————————————————————— 1 ( ( 320 160 160 ————————————————————— Table 16.1(b) The multiplier round: answer to question: mpcd = ¾ —————————————————————— Period (J (Y (Cd (W (£m) (£m) (£m) (£m) —————————————————————— 1 160 160 120 40 ( 2 – 120 90 30

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