a. The following information is a three sector economy of a Consumption function (C) = 310 + 0.6Yd Investment multiplier (I) = 200 Government expenditure (G) = 170 Tax (T) = 180 i. Find value of autonomous consumption ii. Find marginal propensity to consume (MPC) and marginal propensity to save (MPS) iii) Using appropriate method, calculate national income equilibrium and show it in diagram.

a. The following information is a three sector economy of a Consumption function (C) = 310 + 0.6Yd Investment multiplier (I) = 200 Government expenditure (G) = 170 Tax (T) = 180 i. Find value of autonomous consumption ii. Find marginal propensity to consume (MPC) and marginal propensity to save (MPS) iii) Using appropriate method, calculate national income equilibrium and show it in diagram.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section: Chapter Questions

Problem 2DQ

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QUESTION 2

a. The following information is a three sector economy of a

Consumption function (C)	=	310 + 0.6Yd
Investment multiplier (I)	=	200
Government expenditure (G)	=	170
Tax (T)	=	180

i. Find value of autonomous consumption

ii. Find marginal propensity to consume (MPC) and marginal propensity

to save (MPS)

iii)

Using appropriate method, calculate national income equilibrium and

show it in diagram.

Definition Definition Monetary value of all goods and services produced in an economy during a financial year. National income also refers to the total income earned by the factors of production during a financial year.

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