MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
expand_more
expand_more
format_list_bulleted
Question
Chapter 9.A, Problem 2TY
To determine
To calculate: The equilibrium level of
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solution
Students have asked these similar questions
Suppose that autonomous consumption (a) is 300, private investment spending (I) is 420, government spending (G) is 400, Net taxes (T) are 400 and marginal propensity to consume (b) is 80 %, and marginal tax rate (t) is 25 %. By using the above information:
Find the equilibrium value of national income and show it on a graph
After government is added to the income-expenditure model, the formula for the aggregate consumption function is
Group of answer choices
C = a - b(T - Y).
C = a + b(Y + T).
C = a - b(Y - T).
C = a + b(Y - T).
Suppose that autonomous consumption (a) is 300, private investment spending(I) is 420, government spending (G) is 400 , Net taxes (T) are 400 and marginal propensity to consume (b) is 80 %, and marginal tax rate (t) is 25 % .
By using the above information
Find the equilibrium value of national incomeand show it on a graph.
Knowledge Booster
Similar questions
- Which of the following statements are correct? The introduction of government spending increases the size of the multiplier. The introduction of taxes increases the size of the multiplier. The introduction of taxes reduces the slope of the consumption function. Select one: A. A B. None of the statements is correct. C. C D. Barrow_forwardsuppose the government in this economy decides to decrease government purchases by 300 billion decrease in government purchases will lead to a decrease in income generating an initial change in consumption equal toarrow_forwardWhich of the following will increase consumption spending? Group of answer choices a housing market crash an increase in the personal income tax rate a boom in the stock market an increase in the nominal interest ratearrow_forward
- Suppose the marginal propensity to consume is 0.75, the marginal propensity to import is 0.25, there are no taxes, and total autonomous expenditure is 100. The Aggregate Expenditure function isarrow_forwardSuppose the level of autonomous investment in an economy is 200 and the consumption function is given by C=80+0.75Y. Find the equilibrium level of income What will be the increase in national income if investment is increased by 25.arrow_forwardUse the following information on economy X to answer the questions below. Consumption function: C = 250 + 0.8Y Investment spending: I = 150 Government spending: G = 500 Exports of goods and services: X = 200 Imports of goods and services: Z = 150 Proportional tax rate: t =25% Full employment level of income = 3575 Calculate the change in government spending required to reach full employment level of income.arrow_forward
- Suppose a closed economy has an intended investment of 100 and an aggregate consumption function given by C = 250 + 0.75Yd. Suppose also that the government spends 150 but collects no taxes. What is equilibrium output and income?arrow_forwardAssume a simple model with no government or foreign sector. If an increase in autonomous investment of 100 leads to an increase in consumption of 300, the size of the expenditure multiplier isarrow_forward
arrow_back_ios
arrow_forward_ios
Recommended textbooks for you
Economics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Exploring EconomicsEconomicsISBN:9781544336329Author:Robert L. SextonPublisher:SAGE Publications, Inc
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning
Exploring Economics
Economics
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:SAGE Publications, Inc