Suppose that autonomous consumption (a) is 200, private investment spending (I) is 340, government spending (G) is 300 , Net taxes (T) are 300 and marginal propensity to consume (b) is 80 %, and marginal tax rate (t) is 25 % . By using the above information: a) Find the equilibrium value of national income (you can take the approximate value if necessary  b) Find out the effects of an increase in government expenditure by100  c) Just find the new national income equilibrium level when marginal tax rate is increased to 30 % and marginal propensity to consume is increase to 0.9.  (you can give the numerical value approximately

Question

Suppose that autonomous consumption (a) is 200, private investment spending (I) is 340, government spending (G) is 300 , Net taxes (T) are 300 and marginal propensity to consume (b) is 80 %, and marginal tax rate (t) is 25 % . By using the above information:

  1. a) Find the equilibrium value of national income (you can take the approximate value if necessary 
  2. b) Find out the effects of an increase in government expenditure by100 
  3. c) Just find the new national income equilibrium level when marginal tax rate is increased to 30 % and marginal propensity to consume is increase to 0.9.  (you can give the numerical value approximately   

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