an economy is currently in equilibrium. The following figures refer to elements in its ational income accounts. Elements Consumption (total) 70 Investment Government Expenditure Imports 10 Exports 8 Table 2 a) What is the current equilibrium level of income? b) What is the level of injections? What is the level of withdrawals? c) If national income now rises by £12 bln., and as a result, the consumption of domestically produced goods rises to £68 bln. Calculate the marginal propensity to consume (MPC). d) What is the value of the multiplier? e) Comment on the results in part (c) and (d).

an economy is currently in equilibrium. The following figures refer to elements in its ational income accounts. Elements Consumption (total) 70 Investment Government Expenditure Imports 10 Exports 8 Table 2 a) What is the current equilibrium level of income? b) What is the level of injections? What is the level of withdrawals? c) If national income now rises by £12 bln., and as a result, the consumption of domestically produced goods rises to £68 bln. Calculate the marginal propensity to consume (MPC). d) What is the value of the multiplier? e) Comment on the results in part (c) and (d).

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 7TY

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