Suppose the households in a hypothetical economy has the following consumption function C = a +cYd Where Ya is the disposable income. The government in this economy imposes a tax rate of 0 < t < 1 to households' income (ex. A t = 0.10 means that 10% of households' income goes to tax payments).
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- Give typing answer with explanation and conclusion Suppose that the typical Canadian spends 80 percent of their income. There is an income tax rate is 15% per period. If the government wanted to see the effect of a tax cut of $50 billion, what would be the tax multiplier that they would have to use.. Suppose an economy is represented by the following equations.Consumption function C = 100 + 0.8YdPlanned investment I = 38Government spending G = 75Exports EX = 25Imports IM = 0.05YdAutonomous Taxes T = 40Planned aggregate expenditure AE = C + I + G + (EX - IM)a. By using the above information calculate the equilibrium level of income for thiseconomy. b. Calculate the value of expenditure multiplier. c. Suppose that government spending is increased by 5, what will happen to theequilibrium income level?3 bok t ces The simple economy of Altria shown in the table below has no government or taxes and no international trade. Its investment is autonomous and its MPC is constant. a. Complete the table below. Remember to use a minus (-) sign to indicate negative values. AE Y S I 200 0 400 800 1,200 1,600 2,000 C 200 500 800 1100 1400 1700 0 -200 -100 100 200 300 b. The value of expenditures equilibrium is $ c. The value of the multiplier is
- Suppose an economy is represented by the following equations.Consumption function C = 200 + 0.8YdPlanned investment I = 400Government spending G = 600Exports EX = 200Imports IM = 0.1YdAutonomous Taxes T = 500Marginal Tax Rate t=0.2Planned aggregate expenditure AE = C + I + G + (EX - IM) By using the above information calculate the equilibrium level of income for this economy and explain why fiscal policy becomes less effective in an open economy25 1 Calculate the equilibrium level of investment if you have the following equations: C=0.4Yd+20, national income is 1000, government expenditures is 200, tax is 50 Investment =300 O Investment-D350 O Investment3D400 O Investment3D450 O None of the above OThe formula for the government spending multiplier is A) 1/(1+ MPC). B) 1/MPS. O C) 1/MPC. O
- 15. If government's spending increases by 60 and marginal propensity to consume is 0.8, how will the increase in equilibrium income be? 65 b) 300 90 d) 250Use the following information on economy X to answer the questions below.Consumption function: C = 250 + 0.8YInvestment spending: I = 150Government spending: G = 500Exports of goods and services: X = 200Imports of goods and services: Z = 150Proportional tax rate: t =25%Full employment level of income = 3575Q.4.1.4 Calculate the change in government spending required to reach full employment level of income.4. In the economy of St. Maynard Island, autonomous consumption expenditure is $185 million, and the marginal propensity to consume is 0.75. Investment is $150 million, government expenditure is $100 million, and net taxes are $80 million. Investment, government expenditure, and taxes are constant - they do not vary with income. The island does not trade with the rest of the world. a) What is the consumption function? b) What is the aggregate expenditure function? c) What is the island's autonomous aggregate expenditure? d) What is the size of the multiplier in St. Maynard Island's economy? e) What is the island's aggregate planned expenditure and what is happening to inventories when real GDP is $1,100 million? f) What is the economy's equilibrium aggregate expenditure?
- 1.2. The consumption function for a simple economy is given by C = 330 + 0.6%d 1.2.1. Write an expression for savings in the economy. ANSWER: 1.2.2. Express consumption in terms of Y when direct taxation is levied as a lumpsum tax, T = 210 ANSWER: 1.2.3. Express the consumption function when a proportional tax, t = 0.25, is added ANSWER:T Normal 1 No Spac. Heading 1 Headin Paragraph Q1:You are given the following income-expenditures model for an economy: Consumption C = 300 + .64Yd Tax (T) = $60 %3D Government expenditure G= $100 Investment (I) = $120 %3D From above data calculate the follows: 3. At the equilibrium level of income, what is the amount of savings?ON 102 LEC 850 - Winter 2023 - INTRODUCTION TO MACROEC ard / My courses / ECON 102 (LEC 850 Winter 2023) General / S on 12 ed out of on ve Progress Which of the following changes in personal income tax would lead to the smallest increase in consumption? O a. a $30 000 decrease in taxes, if MPC equals 0.25 O b. a $15 000 decrease in taxes, if MPC equals 0.6 O c. a $20 000 decrease in taxes, if MPC equals 0.5 O d. a $12 000 decrease in taxes, if MPC equals 0.75 O e. e. a $10 000 decrease in taxes, if MPC equals 0.2 Previous page Time left 4:58:21 Last saved at 22:40:19 cross out cross out cross out cross out cros ut Finish attempt ... Quiz nav 1 7 2 8 Finish att