he data below is for the small economy of Christodea in 2015. Consumption: C = 500 + 0.75Y, Net taxes: T = 20 + 0.2Y Planned investment: / = 525 Government expenditure: G = 800 Exports: X = 250 Imports: M = 260 + 0.1Y Calculate the following: a) Government wished to decrease unemployment by increasing national income by 200. How much must government expenditure increase in order to achieve this target? b) Assume an increase in government expenditure of 100 supported by a 100 increase in autonomous taxation, what would be the impact of this fiscal policy on national income? c) Calculate the following after the change in policy in e) above. i) Government budget position. ii) Balance on current account. i) Total consumption

he data below is for the small economy of Christodea in 2015. Consumption: C = 500 + 0.75Y, Net taxes: T = 20 + 0.2Y Planned investment: / = 525 Government expenditure: G = 800 Exports: X = 250 Imports: M = 260 + 0.1Y Calculate the following: a) Government wished to decrease unemployment by increasing national income by 200. How much must government expenditure increase in order to achieve this target? b) Assume an increase in government expenditure of 100 supported by a 100 increase in autonomous taxation, what would be the impact of this fiscal policy on national income? c) Calculate the following after the change in policy in e) above. i) Government budget position. ii) Balance on current account. i) Total consumption

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 4TY

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