Consider the following information about an economy. C=100+b(Y-50-0.25Y); I=50, G=50, X=10, M=5+0.1y, t=0.25Y, MPC=0.8 Find equilibrium national income Find the foreign trade multiplier What components are excluded in calculating national income and why? [
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Consider the following information about an economy.
C=100+b(Y-50-0.25Y);
I=50,
G=50,
X=10,
M=5+0.1y,
t=0.25Y,
MPC=0.8
Find equilibrium
Find the foreign trade multiplier
What components are excluded in calculating national income and why? [
What is the effect of an increase in t of 0.3 on the equilibrium income and the multiplier?
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- Consider the following information about an economy. C=100+b(Y-50-0.25Y); I=50, G=50, X=10, M=5+0.1y, t=0.25Y, MPC=0.8 Find equilibrium national income Find the foreign trade multiplier What components are excluded in calculating national income and why? What is the most common method of computing national income in Zambia and why? What is the effect of an increase in t of 0.3 on the equilibrium income and the multiplier?Using the following data, determine: National Income (GDP) 1,275 billion Marginal propensity to consume, b 0.9 Proportional rate of taxes 0.35 Autonomous expenditure 45 billion Exports 400 billion Marginal propensity to import, MPIm 0.23 Part 1: Level of Canadian imports, M? Part 2: Level of Canadian net exports, NX? Part 3: Is the trade balance in: (answer 1 for Surplus or 2 for Deficit )An open economy with a government sector is in equilibrium. Assume the following: Marginal propensity to save = 0.4 Marginal propensity to tax = 0.2 Marginal propensity to import = 0.2Showing your method of working, calculate by how much the equilibrium level of national income would fall, if injections in the economy are reduced by $60m.
- The following equations describe an economy: Y = C + I + G + X – M [where X=exports, M=imports] C = 150 + 0.7*(Y - T) T = 30 I = 300 G = 60 X = 140 M = 100 + 0.2*(Y - T) Which of the following statement is true? The value of the government spending multiplier is 3.33. If exports increase by 10, equilibrium Y will increase by 20. If government spending increases by 40, equilibrium Y will increase by 333. Without any changes, the equilibrium level of Y is 2167.Using what you know about national income accounting, answer the following as true, false, or uncertain and justify your answer: [Assume households either consume or save their income only.] a)If the private sector is balanced and transfers are held constant, an increase in taxes implies a decrease in net exports. b)An increase in disposable personal income must imply an increase in private investment. c)Holding the government budget deficit constant, an increase in net exports must imply an increase in disposable income.Assume that the foreign economy is characterized by the same equations as the domestic economy (with asterisks reversed). Use the two sets of equations to solve for the equilibrium output of each country. (Hint: Use the equations for the foreign economy to solve for Y* as a function of Y and substitute this solution for Y* in part (a).) What is the multiplier for each country now? Why is it different from the open economy multiplier in part (a)?
- Assume an economy in which:(i) there are no exports and no imports,(ii) investors always want to spend $200 billion, or I = 200,(iii) government spends $500 billion and tax revenue is $200 billion,(iv) consumption is a linear function of disposable income, C=100+0.8Yd Assume instead that the government wishes to maintain taxes at $200 billion(T=200), but wants to achieve an equilibrium level of national income of $4200 billion(Y=4200) by increasing government spending. To achieve this result, by how much mustgovernment spending increase?In an open economy such that: C = 100 + 0.90 (Y – T) Md = 0.40 Y - 20 R I = 20 - 10 R Ms = 100 + BP X = 30 - 0.10 Y BP = X + K T = 40 K = 10 + 5R G = 50 Determine the equilibrium levels of Y and R. If G increases to $100, what are the new Y and R? What is the government spending multiplier?34.With the additional leakages of imports and taxes in additional to savings in a public, open economy, how is the economy still able to reach equilibrium? 35.Compare and contrast the recessionary expenditure gap and the inflationary expenditure gap. 36.If there is a recessionary expenditure gap of $100 billion and the MPC is 0.80, by how much must taxes be reduced to eliminate the recessionary expenditure gap?
- Consumption function C = 200 + 0.8Yd Planned investment I = 400 Government spending G = 600 Exports EX = 200 Imports IM = 0.1Yd Autonomous Taxes T = 500 Marginal Tax Rate t=0.2 Planned aggregate expenditure AE = C + I + G + (EX - IM) By using the above information calculate the equilibrium level of income for this economy and explain why fiscal policy becomes less effective in an open economyMexico's real GDP fell from 4.5 trillion pesos to 3.8 trillion pesos over the first part of 2020. In that same time, its consumer spending fell from 3.1 trillion pesos to 2.5 trillion pesos. Assume that real GDP represents disposable income. Using these values, what is the size of the tax cut multiplier? (Round answers to one decimal place.Suppose an economy is described by the following equations: Y = C + I + G + X – M C = 14 + 0.60Yd I = 20 G = 20 X = 15 M = 5 +0.1Y T = 20 + 0.4Y Where Y is domestic income Yd is private disposable income C is aggregate consumption spending T is government tax revenue I is investment spending G is government spending E represents exports M represents imports of goods and services. (a) If the equilibrium national income is less than the full-employment level of income by N$100, what should be the increase in government spending or in exports to attain the full-employment level of income? (b) With a help of a diagram explain and discuss life cycle hypothesis.