Given the following table. Income (RM million) Consumption (RM million) 0 100 100 150 200 200 300 250 400 300 500 350   How much is the autonomous consumption in the economy? How much investment should be increased to achieve an income of RM400 million? Calculate the MPS. Derive the consumption function.

Question 1: In an economy C = 350 + 0.75 Y is the consumption function where C is consumption expenditure and Y is national income. Investment expenditure is 4,000. a) Calculate equilibrium level of income. b) Calculate consumption expenditure.

The table below provides income and consumption data in billions of dollars: Disposable Income Consumption Savings 100 80 --- 200 150 --- If the government increases spending by $5,000, then based on the data, GDP in this economy will increase by: A) $7,142.85 B) $22,000 C) $16,650 D) Cannot be answered

11:04 AM ECON 122 CAT ONE.docX Phoenix Files QUESTION ONE Is it desirable for a country to have a large gross domestic product? Explain (2 marks) QUESTION TWO You are given data on the following variables in an economy Government spending 300 Planned investment Net exports Autonomous taxes Income tax rate Marginal propensity to consume 0.5 a) Consumption (C) is 600 when income (Y) is equal to 1500. Solve for autonom ous consumption (2 ma rks) ii) 200 S 50 b) Solve for the equilibrium level of output in the following two scenarios: i) There is an income tax t=0.1, Edit 0.1 250 Q Search © | 46| 472 [ 66 c) In the economy with an income tax of 10%, what is the budget balance of the government? (2 marks) O X: × There is no income tax in the economy. Denote these two variables by Yw and YN respectively. (4 marks) d) Solve for the change in net exports that would bring the equilibrium output lev el in the economy with the income tax to the level of YN that you found in part b. specify both…