Suppose the consumption of an economy is given by C = 20 +0.6Y The following investment function is given : 1 = 10+ 02Y %D What will be the equilibrium level of national income?
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- Precisely how do the APC and the MPC differ?What is exogenous (autonomous) expenditure and what is the value of the multiplier? Calculate equilibrium output for this economy. Show how you obtained your figure.How does investment as defined by economists differ from investment as defifined by the general public? What would happen to the amount of investment made today if firms expected the future returns to such investment to be very low? What if firms expected future returns to be very high?
- If the consumption function is given by C=20+3/4 Y then the value of multiplier will be???Assume in country Y, the average marginal propensity to save is 0.2. When the aggregateincome is zero, consumers spend 50 to consume. Derive the saving function and consumptionfunction for this country. What happens to consumption when the propensity to savedecreases to 0.1? Explain your answer and show this on the graph.What happens to GDP if the investment icreases by 100 with MPC = 0,8 and tax 20%?
- If MPC = 0.28 how much will be the additional investment required to increase income by 1300 also find the multiplier?On a microeconomic demand curve, a decrease in price causes an increase in quantity demanded because the product in question is now relatively less expensive thansubstituteproducts.Explainwhyaggregatedemand does not increase for the same reason in response to a decrease in the aggregate price level. In other words, whatcausestotalspendingtoincreaseifitisnotbecause goods are now cheaper?Assume that the economy is now governed by a government and begins trading with other economies. The economy is described by the following set of equations. ?=1000+0.5⋅?d ID = 600 G=700 T=400 EX=0.1⋅Y IM=100+0.1⋅Y YD = Y - T Calculate the equilibrium level of output Y* a) 2857 b) 4000 c) 6274 d) 4400 Whats the government expenditure multiplier? Whats the tax multiplier? Whats the ba;anced budget multiplier?