B(a): (b) The National Income Model is given by: a. Y = A + C + G b. C = a(Y-T) Find the equilibrium Level of Income when: A = 10 G = 10 á = 0.7 To = 20 c. T = To + t₁ Y t₁ = 0.4
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- What type of solutions do you get in Samuelson´s Model of national income when the parameters satisfy αγ= 1?Using any model you wish, explain what might be the consequences for the circular flow of income of: (a) an increase in government spending; (b) an increase in tax revenue.Consider the following national income model : Y = C + I + Go C = 224 + 0.55Y 3.1I = 184 + 0.22Y Where Go = 187 a. What is the determinant of the coefficient matrix? b. What is the equilibrium value of Y? c. What is the equilibrium value of C? d. What is the equilibrium value of I?
- Using a three sector open circular flow of income model: a. Explain what is meant by equilibriumb. Explain the conditions for the circular flow of income to be in equilibriumwith the aid of a diagram, explain the income and expenditure modelLet the national income model be; Y = C + I0 + G , C = a + b ( Y – T) , G = g Y Identify endogenous variables Find the equilibrium national income Find equilibrium consumption(using static equilibrium & matrix algebra both
- Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300 million with the proportion of an increase in income that is spent on consumption is 05. An induced tax of 20% is imposed by the country. The amount of investment is RM250 million, and the amount of government spending is RM150 million. A) calculate the national income equilibrium.Consider a national income model as: Y= C + I0 + G Y= National Income C= (Planned) Consumption Expenditure I0= Investment G= Government Expenditure Consider Y= 20trillion, G= 4.2trillion, I0= 3.8 trillion. Explain the key elements missing from the National Income model. Add a new endogenous variable to represent that missing element or endogenize one of the exogenous variables to address this issue. C= a+ b(Y-T0) (a>0, 0<b<1) G= gY (0<g<1)what is it that the three income hypothesis have in common, does it address the the deficiency in the Keynesian absolute income model?
- Assume that a three-sector economy in Country W. The amount of autonomous consumption is RM300 million with the proportion of an increase in income that is spent on consumption is 0.5. An induced tax of 20% is imposed by the country. The amount of investment is RM250 million, and the amount of government spending is RM150 million. (iii) Explain what would happen to the national income equilibrium if the investment changes by RM100 million.Consider a hypothesis economy described by the following equation C=100 I=1200 X-1110 M=200+0.25Y T=250+0.3Y Required 1.Compute the equilibrium level of the national income 2.The level of consumption income after tax and net exports that corresponds to the equilibrium level national incomeThe national income model for an economy is represented as follows (units are in Ksh.M) Y = C + I + G + X – M I = 320 + 0.20Y G = 980 C = 540 + 0.80Y M = 640 + 0.25Y X = 850 Y = National income; C = Consumption; I = Investment; G = government spending; X = Exports; and M = Imports. Determine the following.TRUE or FALSE: This model has three endogenous variablesAnswer 1Choose... TRUE or FALSE: The country’s marginal propensity to save is 20%.Answer 2Choose... Autonomous level of importsAnswer 3Choose... Equilibrium investment Answer 4Choose... Equilibrium national incomeAnswer 5Choose... Net Exports (NX) Answer 6Choose... TRUE or FALSE: The economy is a net importer
