Behavioural and Structural equations of an economy are given below: C = 200 + b (Y – 100 – tY) I = 100 G = 100 X = 20 M = 10 + 0.1Y The marginal propensity to consume ‘b’ is equal to 0.8 and proportional income tax rate, t = 0.25. Find the equilibrium national income; Find the value of foreign trade multiplier & equilibrium value of imports If equilibrium national income falls short of full employment income by Rs100, how much government should increase its expenditure to attain full – employment?

Behavioural and Structural equations of an economy are given below: C = 200 + b (Y – 100 – tY) I = 100 G = 100 X = 20 M = 10 + 0.1Y The marginal propensity to consume ‘b’ is equal to 0.8 and proportional income tax rate, t = 0.25. Find the equilibrium national income; Find the value of foreign trade multiplier & equilibrium value of imports If equilibrium national income falls short of full employment income by Rs100, how much government should increase its expenditure to attain full – employment?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 1TY

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