MACROECONOMICS
14th Edition
ISBN: 9781337794985
Author: Baumol
Publisher: CENGAGE L
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Question
Chapter 9, Problem 4TY
To determine
To calculate: The equilibrium level of
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Fill in the missing values in the following table. Assume that the value of the MPC does not change as real GDP changes and that there are zero taxes. (Enter all values as integers.)
Real GDP
(Y)
Consumption
(C)
Planned
Investment (1)
Government
Purchases (G)
Net
Exports (NX)
$11,000
- $275
$12,000
- $275
$13,000
- $275
$14,000
- $275
$15,000
- $275
Now use the table to find aggregate expenditure and the unplanned change in inventories.
Real GDP
(Y)
$11,000
$12,000
$5,500
$6,000
$
Consumption
(C)
$5,500
$6,000
Planned
Investment (1)
$1,100
$1,100
$1,100
$1,100
$1,100
$1,100
$1,100
Government
Purchases (G)
$1,200
1,200
Net Exports
(NX)
- $275
- $275
$1,200
1,200
1,200
1,200
1,200
Planned Aggregate
Expenditure (AE)
$
Unplanned
Change in
Inventories
Q1:You are given the following income-expenditures model for an economy :
Consumption C = 300 + .64Yd
Tax (T) = $60
Government expenditure G = $100
Investment (I) = $120
From above data calculate the follows:
1. Equilibrium level of income
2. At the equilibrium level of income, what is the amount of consumption?
B) In a closed economy, the functions for consumption, investment, government
expenditure and taxation are given as below (in RM million).
Consumption function
: C=500 + 0.75 Yd
Investment function
| = 800
Government expenditure
:G = 400
Тахation
:T= 200 + 0.2 Y
i.
Find the equilibrium level of national income for the economy stated
above.
ii.
Draw a graph to show the equilibrium of national income by using AD=AS
approach.
Find the total value of taxation when the national income is at equilibrium.
iii.
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