Behavioural and Structural equations of an economy are given below: C         =          200 + b (Y – 100 – tY) I           =          100 G         =          100 X         =          20 M         =          10 + 0.1Y The marginal propensity to consume ‘b’ is equal to 0.8 and proportional income tax rate, t = 0.25. Find the equilibrium national income; Find the value of foreign trade multiplier & equilibrium value of imports If equilibrium national income falls short of full employment income by Rs100, how much government should increase its expenditure to attain full – employment?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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  1. Behavioural and Structural equations of an economy are given below:

C         =          200 + b (Y – 100 – tY)

I           =          100

G         =          100

X         =          20

M         =          10 + 0.1Y

The marginal propensity to consume ‘b’ is equal to 0.8 and proportional income tax rate, t = 0.25.

  1. Find the equilibrium national income;
  2. Find the value of foreign trade multiplier & equilibrium value of imports

If equilibrium national income falls short of full employment income by Rs100, how much government should increase its expenditure to attain full – employment?       

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