Behavioural and Structural equations of an economy are given below:C = 200 + b (Y – 100 – tY)I = 100G = 100X = 20M = 10 + 0.1YThe 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 importsIf equilibrium national income falls short of full employment income by Rs100, how much government should increase its expenditure to attain full – employment?

Keynesian Model help understand the equilibrium level of income in the economy, in which the…

Answered: Behavioural and Structural equations of…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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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?

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