Suppose the consumption of an economy is given by C = 20 +0.6Y The following investment function is given : 1 = 10+ 02Y %D What will be the equilibrium level of national income?
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- Suppose we have the following consumption function in an economy C = 2000 + 0.9YD. Howmuch government spending has to be increased in order to have an increase in equilibriumoutput equal to 1000? a. 100.b. 200.c. 250.d. 1000.e. none of these.f. do not have adequate information.Given a consumption function, C = c0 + cY, specified such that the marginal propensity to consume is 75%, how much will C increase by if Y increases by £3bn? a. £0.75bnb. £2,250mc. £2bn d. £1,500mYou are given data on the following variables in an economy: Government spending 300 Planned investment 200 Net exports 50 Autonomous taxes 250 Income tax rate 0.1 Marginal propensity to consume 0.5 Use the data above to answer the following questions. Consumption (C) is 600 when income (Y) is equal to 1500. Solve for autonomousconsumption. Solve for the equilibrium level of output in the following two scenarios: there isan income tax t=0.1, there is no income tax in the economy. Denote these two variablesby and respectively. In the economy with an income tax of 10%, what is the budget balance of thegovernment? Solve…
- Assume that in 2015, the following prevails in theRepublic of Nurd:Y = $200 G = $0C = $160 T = $0S = $40I (planned) = $30Assume that households consume 80 percent of their income, they save 20 percent of their income, MPC = 0.8,and MPS = 0.2. That is, C = 0.8Yd and S = 0.2Yd.a. Is the economy of Nurd in equilibrium? What is Nurd’sequilibrium level of income? What is likely to happen inthe coming months if the government takes no action?b. If $200 is the “full-employment” level of Y, what fiscal policy might the government follow if its goal is fullemployment?c. If the full-employment level of Y is $250, what fiscalpolicy might the government follow?d. Suppose Y = $200, C = $160, S = $40, and I = $40. IsNurd’s economy in equilibrium?e. Starting with the situation in part d, suppose the government starts spending $30 each year with no taxationand continues to spend $30 every period. If I remainsSuppose the MPC = 0.6. If income increases by $100 billion, by how much would consumption change? If investment spending decreases by $50 billion, what would be the cumulative effect on y*?If the consumption function is C = 100 + 0.75YD,I = 200, government spending is 200, and net exportsare zero, what will be the equilibrium level of output?What will happen to aggregate output if governmentspending rises by 100?
- Given a consumption function, C = c0 + cY, specified such that the marginal propensity to consume is 75%, what will consumption expenditure be if total income is £538bn? a. £584+ c0 bn b. £403.5 + c0 bnc. £538 + c bnd. £403.5 bnSuppose the MPC = 0.6? What will be the government spending multiplier? If, in this economy, government spending (G) increases by $300, what will happen to Total Spending? Show your workThe Wilson family has a disposable income of $70,000 annually. Currently, the Wilson family spends 80% of new disposable income on consumption. Assume that their marginal propensity to consume is 0.8 and that their autonomous consumption spending is equal to $10,000. What is the amount of the Wilson family's annual consumer spending?
- Suppose that for a particular economy, for some time period, consumption was given by theconsumption function C = 300 + 0.9YD, investment was equal to 200, government expenditure wasequal to 100, net taxes were fixed at 100, exports were equal to 200, and imports were given by theimports function Z = 10 + 0.1YD. Note that YD represents disposable income. a.Suppose households earn $150 more in their disposable income. How much more would theyconsume in total? How much go to domestic goods and how much go to imported goods? Howmuch would they end up saving? b.What is the level of equilibrium income? What about the level of consumption and import? c.What are the values of the government spending multiplier, tax multiplier and balanced-budgetmultiplier? d.Suppose the investment level suddenly declined by 20. How should the government stabilize theeconomy? Please provide all options in detailSup suppose the level of autonomous investment in an economy is 2,000 shillings and the consumption function is c=800 +0.25Y find the equilibrium levels What will be the increase in national income if the investment increases by 250 Suppose that the level of planned investment is to the ceilings and the saving function is given by S=-800 + 0.25Y ,find the equilibrium levels of income Suppose the consumption function is given by C=200+0.2Y ,find the equilibrium levels of income With is a graph discuss the ranges of the aggregate supply curveAssume in country Y, the average marginal propensity to save is 0.2. When the aggregateincome is zero, consumers spend 50 to consume. Derive the saving function and consumptionfunction for this country. What happens to consumption when the propensity to savedecreases to 0.1? Explain your answer and show this on the graph.
