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6. Given the following data regarding an economy: Autonomous consumption: 1,000 billion dong; marginal propensity to consume with respect to disposable income: 0.8; investment:
6. Given the following data regarding an economy: Autonomous consumption: 1,000 billion dong; marginal propensity to consume with respect to disposable income: 0.8; investment: 4,600 billion dong; government spending: 4,000 billion dong; tax: 4,000 billion dong; No transfer fees, no exports and imports. a. Calculate the equilibrium level of GDP and consumer spending. b. If government spending is reduced to 3,000 billion dong, how much will GDP and consumer spending change? c. What is the multiplier? 7. Assuming tax laws change: the tax rate now accounts for one- eighth of GDP. The other elements are the same as question 6. a. Calculate the equilibrium level of GDP and consumer spending. b. If government spending is reduced to 3,000 billion dong, how much will GDP and consumer spending change? c. What is the multiplier?
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