Suppose in a simple Keynesian economy, planned consumption function is given by C=250+0.65(Y-T). Planned investment, government purchases, taxes are $100 million, $100 million and $150 million respectively. 3. If government purchases increase to $150 million, what is the new equilibrium level of income? 4. What level of government purchases is needed to achieve an income of $2000 million? 5. From question e) you get the newly government purchase. Now find out the multiplier value

Suppose in a simple Keynesian economy, planned consumption function is given by C=250+0.65(Y-T). Planned investment, government purchases, taxes are $100 million, $100 million and $150 million respectively. 3. If government purchases increase to $150 million, what is the new equilibrium level of income? 4. What level of government purchases is needed to achieve an income of $2000 million? 5. From question e) you get the newly government purchase. Now find out the multiplier value

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter8: The Keynesian Model

Section: Chapter Questions

Problem 2SQP

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The graph shows the relationship between real disposable income and planned consumption. The horizontal axis measures real disposable income, while the vertical axis measures the level of planned consumption. The graph shows a consumption function, represented by an upward-sloping, straight line. The consumption function intercepts the vertical axis at a point labeled A. The graph also shows a 45-degree line that passes through the origin. The consumption function and the 45-degree line intersect at a point labeled B. Refer to the above figure. Dissaving occurs, A. to the left of point B. B. to the right of point B. C. only at point A. D. only at point B.
consumption function is given by C = 110 + 0.75(Y - T). Planned investment is 300; government purchases is 350. Assume a balanced budget. Graph planned expenditure as a function of What is the equilibrium level of income? If government purchases increase to 400, what is the new equilibrium income? What is the multiplier for government purchases? What level of government purchases is needed to achieve an income of 2,200? (Taxes remain ) What level of taxes is needed to achieve an income of 2,200? (Government purchases remain at )
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please kindly assist with the following QnA Induced consumption is: (a) the part of consumption which is independent of the level of income.(b) the minimum level of consumption that is financed from sources other than income.(c) The maximum level of consumption that is financed from sources other than income.(d) shown by the slope of the consumption function.In the Keynesian model, an introduction of a proportional tax will: (a) increase the slope of the consumption function.(b) reduce the multiplier.(c) increase the equilibrium level of income.(d) increase the multiplier.A decrease in the price level will: (a) shift the AS curve to the left.(b) shift the AD curve to the left.(c) shift the AS curve to the right.(d) leave both the AD curve and the AS curve unchanged. During an economic expansion, real GDP ____ and unemployment ____. (a) increases, increases (b) increases, decreases (c) decreases, increases(d)…