You are given the following information about a closed economy with no government: Consumption = 115 + 0.6Y Investment = 550 Use the above information to answer the questions that follow: Q.4.1 Calculate the value of autonomous spending. Q.4.2 Calculate the value of the multiplier. Q.4.3 Calculate the equilibrium level of income.

You are given the following information about a closed economy with no government: Consumption = 115 + 0.6Y Investment = 550 Use the above information to answer the questions that follow: Q.4.1 Calculate the value of autonomous spending. Q.4.2 Calculate the value of the multiplier. Q.4.3 Calculate the equilibrium level of income.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy

Problem 1TY

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You are given the following information about a closed economy with no government:Consumption = 115 + 0.6YInvestment = 550Use the above information to answer the questions that follow:Q.4.1 Calculate the value of autonomous spending. (3)Q.4.2 Calculate the value of the multiplier. (3)Q.4.3 Calculate the equilibrium level of income. (3)Q.4.4 Is the equilibrium level of income also the full employment level of income? Explainyour answer.(3)Q.4.5 Identify any three non‐income determinants of consumption. (3)
You are given the following information about a closed economy with no government: Consumption = 115 + 0.6YInvestment = 550Use the above information to answer the questions that follow: Q.4.1 Calculate the value of autonomous spending. Q.4.2 Calculate the value of the multiplier. Q.4.3 Calculate the equilibrium level of income.
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True or False. If spending exceeds output, real GDP will decline as firms cut back on production.
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You are given the following information about a closed economy with no government:Consumption = 115 + 0.6YInvestment = 550Use the above information to answer the question: Calculate the equilibrium level of income.
You are given the following information about a closed economy with no government:Consumption = 115 + 0.6YInvestment = 550Use the above information to answer the questions that follow:Q.4.3 Calculate the equilibrium level of income. (3)
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Question 1 Given the following data on simple closed economy: C= 10 + 0.75 Y I= 20 G= 40 where C is aggregate consumption, Y is national income, G is government expenditure on goods and services, and I is investment expenditure. Note: There is no taxes assumed in parts (i) to (iii). ) What is the equilibrium level of national income? Show all your workings. (ii) What is the value of aggregate consumption and the value of aggregate savings at the equilibrium level of the national income? Show all your workings. ( (iii)What would be the new level of national income if government expenditure increased by 10? Show all your workings.
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