Economics For Today
10th Edition
ISBN: 9781337613040
Author: Tucker
Publisher: Cengage Learning
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Question
Chapter 18, Problem 12SQ
To determine
The autonomous consumption of the economy.
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Assume that the consumption function for the above economy is C = 1000 + .75Yd fill in the empty cells. (All Figures are in Billions of Dollars) (3 Points)
Output
Taxes
Disposable Income
Consumption Spending
Saving
Investment
Government
Aggregate
Expenditure
5000
1000
750
750
7000
1000
750
750
9000
1000
750
750
Please calculate level of GDP in equilibrium, consumption and savings level if you know that:
I (investment) = 300
Ca (Autonomous Consumption) = 100
MPS (Marginal Propensity to Save) = 0,1
G (Government Expenditures) = 300
T (net taxe rate) = 0,2
(a)Elaborate THREE (3) determinants in which consumption can be increased according to the consumption function.
(b)Assume that a three-sector economy in Country W. The amount of
autonomous consumption is RM300 million with the proportion of an increase in income that is spent on consumption is 0.5. An induced tax of 20% is imposed by the country. The amount of investment is RM250 million, and the amount of government spending is RM150 million.
(i)Calculate the national income equilibrium.
(ii)Based on your answer in (i), show the aggregate expenditure graph.
(iii)Explain what would happen to the national income equilibrium if the
investment changes by RM100 million.
Chapter 18 Solutions
Economics For Today
Ch. 18.4 - Prob. 1YTECh. 18 - Prob. 1SQPCh. 18 - Prob. 2SQPCh. 18 - Prob. 3SQPCh. 18 - Prob. 4SQPCh. 18 - Prob. 5SQPCh. 18 - Prob. 6SQPCh. 18 - Prob. 7SQPCh. 18 - Prob. 8SQPCh. 18 - Prob. 9SQP
Ch. 18 - Prob. 1SQCh. 18 - Prob. 2SQCh. 18 - Prob. 3SQCh. 18 - Prob. 4SQCh. 18 - Prob. 5SQCh. 18 - Prob. 6SQCh. 18 - Prob. 7SQCh. 18 - Prob. 8SQCh. 18 - Prob. 9SQCh. 18 - Prob. 10SQCh. 18 - Prob. 11SQCh. 18 - Prob. 12SQCh. 18 - Prob. 13SQCh. 18 - Prob. 14SQCh. 18 - Prob. 15SQCh. 18 - Prob. 16SQCh. 18 - Prob. 17SQCh. 18 - Prob. 18SQCh. 18 - Prob. 19SQCh. 18 - Prob. 20SQ
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- in 2019 fiscal year estimated that Ghanaians saved 20 percent of their disposable income; however, due to overconsumption in the previous year, autonomous saving for 2019 was negative 100 million Ghana cedis. The government of Ghana imposed a lump sum tax of Gh ₡ 20 million. In addition to the lump sum tax the government also took 20 percent of all incomesearned in the economy in the form of proportional tax. The total government expenditure was GH ₡50 million in 2019. Total investment recorded for 2019 was 66 million. (A) Determine the tax function for this economy, derive the consumption function based on the above information and write out the aggregate demand equation (b) Determine the equilibrium consumption and calculate the value of the government expenditure multiplier for this economy and interpret your result (c) Calculate the total tax revenue to the governmentarrow_forwardASSUME THAT A THREE SECTOR ECONOMY IN COUNTRY W. THE AMOUNT OF AUTONOMOUS CONSUMPTION IS RM 300 MILLION WITH PROPORTION OF AN INCREASE IN INCOME THAT IS SPENT ON CONSUMPTION IS 0.5. AN INDUCED TAX OF 20% IS IMPOSED BY THE COUNTRY. THE AMOUNT OF IS RM 250 MILLION AND THE AMOUNT OF GOVERNMENT SPENDING IS RM 150 MILLION. CALCULATE THE NATIONAL EQUILIBRIUM INCOME.arrow_forwardThe government raises taxes by Rs. 100 billion. If the marginal propensity to consumeis 0.6, what happens to the following – do they rise or fall? By what amounts? a) Public Savingb) Private Savingc) National Savingarrow_forward
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