A 3-sector economic model was constructed and solved, and assuming the parameterstake on certain values, the multiplier matrix that is obtained is displayed in Table 1.You are required to answer the following questions by showing your calculation inthe space provided.Table 1: Multiplier MatrixExogenous VariablesEndogenous VariablesI*G*T*: Output: Consumption Expenditure 1.895: Tax RevenueY2.6312.631- 2.105C1.895- 2.316T0.2630.2630.789YD : Disposable Income: Government Budget2.3682.368- 2.8950.263- 0.7370.789Balance: Saving0.4740.474- 0.579(a) If autonomous investment is reduced by100, justify its precise impact ondisposable income and tax.Answer : AYD =AT =80, what is the amount of(b) If the govemment has increased its spending byautonomous tax that is required so that the govemment's action in increasing itsspending does NOT have an impact on the government's budget balance?Answer : AT* =

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A 3-sector economic model was constructed and solved, and assuming the parameters take on certain values, the multiplier matrix that is obtained is displayed in Table 1. You are required to answer the following questions by showing your calculation in the space provided. Table 1: Multiplier Matrix Exogenous Variables Endogenous Variables I* G* T* : Output : Consumption Expenditure 1.895 : Tax Revenue Y 2.631 2.631 - 2.105 C 1.895 - 2.316 T 0.263 0.263 0.789 : Disposable Income : Government Budget YD 2.368 2.368 - 2.895 0.263 - 0.737 0.789 Balance S : Saving 0.474 0.474 - 0.579 (a) If autonomous investment is reduced by 100, justify its precise impact on disposable income and tax. Answer : AYD= AT = 80, what is the anmount of (b) If the govermment has increased its spending by autonomous tax that is required so that the government's action in increasing its spending does NOT have an impact on the government's budget balance? Answer : AT* =

A 3-sector economic model was constructed and solved, and assuming the parameters take on certain values, the multiplier matrix that is obtained is displayed in Table 1. You are required to answer the following questions by showing your calculation in the space provided. Table 1: Multiplier Matrix Exogenous Variables Endogenous Variables I* G* T* : Output : Consumption Expenditure 1.895 : Tax Revenue Y 2.631 2.631 - 2.105 C 1.895 - 2.316 T 0.263 0.263 0.789 : Disposable Income : Government Budget YD 2.368 2.368 - 2.895 0.263 - 0.737 0.789 Balance S : Saving 0.474 0.474 - 0.579 (a) If autonomous investment is reduced by 100, justify its precise impact on disposable income and tax. Answer : AYD= AT = 80, what is the anmount of (b) If the govermment has increased its spending by autonomous tax that is required so that the government's action in increasing its spending does NOT have an impact on the government's budget balance? Answer : AT* =

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter18: The Keynesian Model

Section: Chapter Questions

Problem 9SQP

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