You are given data on the following variables in an economy: Item Value Government spending 300 Planned investment 200 Net exports 50 Autonomous taxes 250 Income tax rate 0.1 Marginal propensity to consume 0.5 Consumption (C) is 600 when income (Y) is equal to 1500. a. Solve for autonomous consumption and equilibrium level of output if there is an income tax t=0.2. b. In the economy with an income tax of 10%, what is the budget balance of the government? c. Briefly explain the function of the multiplier as part of Keynesian

You are given data on the following variables in an economy: Item Value Government spending 300 Planned investment 200 Net exports 50 Autonomous taxes 250 Income tax rate 0.1 Marginal propensity to consume 0.5 Consumption (C) is 600 when income (Y) is equal to 1500. a. Solve for autonomous consumption and equilibrium level of output if there is an income tax t=0.2. b. In the economy with an income tax of 10%, what is the budget balance of the government? c. Briefly explain the function of the multiplier as part of Keynesian

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter21: Fiscal Policy

Section: Chapter Questions

Problem 4SQ

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You 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…
Given the following information, answer the question. Autonomous consumption = R100 million Investment spending = R300 million Government spending = R200 million Taxes = R60 million Marginal propensity to consume = ¾ The equilibrium level of output and income is equal to ______. Select one: A. R2 160 million B. R2 580 million C. R2 640 million D. R2 220 million
Note: I need help with parts d, e, and f only Following is information for the economy of Sparkle. All units are milliondollars. Their autonomous consumption is $700, and the marginal propensity to consume is 0.8.Investment spending is constant at $380, and government expenditure is constant at $300.Exports are constant at $500, and imports are constant at $800. Net taxes are constant at $100.Calculate and state your answers for the following questions.a) What is the value of consumption in this economy when the real GDP is $1100?b) What is the value of autonomous aggregate planned expenditure i.e. AE0?c) What is the value of equilibrium aggregate expenditure for this economy?d) What is the value of unplanned changes in the inventory investment when real GDP is$4000?e) What is the size of the multiplier in this economy?f) If investment spending increases by $50, what would be the value of the change in theequilibrium real GDP?
Given the following income, spending, and savings data, please answer parts a-g below : Disposable Income (DI) Consumption (C) Savings (S) $ 0 $. 40000 _________ $100000 $100000 _________ $200000 $160000 _________ $300000 $220000 _________ $400000 $280000 _________ a. Solve for savings at each level of disposable income (DI). b. Solve for the marginal propensity to consume (MPC) and the marginal propensity to save (MPS) between each disposable income level. c. Solve for the average propensity to consumer (APC) and the average propensity to save (APS) at each level of disposable income. d. State the numerical value for the break-even level of disposable income in this example. e. State the numerical value for the autonomous consumption in this example. f. Using the data from the table, graph the consumption line. g. Using the data from the table, graph the savings line. Give me answer part: A ,B ,C
The 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?