Question
1 The following information is provided about an open economy with a government. Use the information to answer the questions that follow (round off your
1 The following information is provided about an open economy with a government. Use the information to answer the questions that follow (round off your answers to 2 decimal places):
Autonomous Consumption = 465
Marginal propensity to consume = 0.6
Autonomous Investment =295
Government expenditure = 450
Exports = 225
Imports = 130 + 0.1Y
T = 0.2Y
Yf = 2 237.9
Show all calculations:
Q.1.1
Calculate the level of autonomous spending in this economy.
Q.1.2
Calculate the size of the multiplier.
Q.1.3
Calculate the equilibrium level of income.
Q.1.4
Calculate the tax revenue to the government of this country when the economy remains in equilibrium.
Q.1.5
Calculate what the equilibrium income should be if the government of this country decides to cancel all taxes, implying the tax rate would now be 0%.
Q.1.6
Calculate the change in government spending required to reach full employment in the economy.
Please show all the calculations thank you
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started