Given that: The government expenditure G = 40, the investment I = 60 the consumption C=(0.75)Ya+10, the taxation=(0.2)Y+40 Where Y is the national income, Y is the disposable income. The equilibrium level of consumption (a) 344 (b)222 (c) 322 (d) 100
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- If aggretate exppenditure is greater than total income: investment will decrease because such a high level cannot be sustained. planned savings will decrease in line with investment. output will increase to replenish depleted inventories. investment will decrease to run down excessive inventories. there is an error, since the two are same by definitionIf C=20 I= 30 G=10 NX=-15 MPC=2/3 T= 30% T=0.3Y What is the equilibrium level of output Y for which national income equal total spendingThe aggregate consumption function is C = 800 + .8Yd. If income is $2,000 and net taxes are $500, consumption equals Group of answer choices 1,500. 2,000. 2,050. 2,150
- Suppose that real domestic output in an economy is 100 units, the quanity of inputs is 10, and the price of each input is $5. The per unit cost of production in the economy described is?True or False: Personal Consumption Expenditures account for about 25% of GDP. Spending on Consumer Durable Goods tends to be very stable from year to year. Sales of used goods are included in GDP at 35% of their original sale price.Qn. 2 Discuss the major effects of taxes on the performance of our economy. Advise the government on some of the major guiding principles they should follow when introducing a tax system.
- If a lump-sum income tax of $35 billion is levied and the MPS is 0.2, the consumption schedule will shift Multiple Choice downward by $28 billion. upward by $28 billion. downward by $35 billion. downward by $7 billion.The Reliable Aircraft Company manufactures small, pleasure-use aircraft. Based on past experience, sales volume appears to be affected by changes in the price of the planes and by the state of the economy as measured by consumers' disposable personal income. The following data pertaining to Reliable's aircraft sales, selling prices, and consumers' personal income were collected: Year Aircraft Sales Average Price Disposable Constant Income (Dollars) (In constant 2006 dollars, billions) 2006 525 16,800 610 2007 450 8,000 610 2008 400 8,000 580 The arc price elasticity of demand between 2006 and 2007 is: The arc income elasticity of demand between 2007 and 2008 is: Assume that these estimates are expected to remain stable during 2009. Forecast 2009 sales for Reliable assuming that its aircraft prices remain constant at 2007 levels and that disposable personal income will increase by 7%. Also assume that the arc…During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expense, raw materials, rent and utilities. The firm’s owner has provided $750,000 of her own money instead of investing the money and earning a 10 percent annual rate of return. Question: Higher personal taxes in the U.S. will affect personal disposable income which in turn will affect the domestic demand for goods and services. Costs of production and inputs however continue declining. What do you expect the U.S. output and prices in the near future. Assume we are moving from the old equilibrium to a new equilibrium. Please state clearly your assumptions and include a graph to support your answer.
- Within the circular flow of income, withdrawals are composed ofA) saving, net taxes and import expenditure.B) consumption, net taxes and import expenditure.C) saving, net taxes and export expenditure.D) saving, investment and import expenditure.Calculate the MPC when MPS is given to be as 0.9what will be the budget expenditure if the revenue expenditure are 620 and the capital expenditure are 229