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allonal $bn National income (Y) 100 120 140 160 180 200 220 National Expenditure (E) 115 130 145 160 175 190 205 a. What is
allonal $bn National income (Y) 100 120 140 160 180 200 220 National Expenditure (E) 115 130 145 160 175 190 205 a. What is the government expenditure multiplier? (assume that all expenditure in made on domestically produced goods) (5mks) Assume that full employment is achieved at a level of national income of $200 billion b. Is there an inflationary or deflationary gap and what is the size? (5mks) c. By how much would government expenditure have to change to close the gap? (assuming no shifts in other injections or withdrawals? (5mks) 3. What factors determine the effectiveness of discretionary fiscal policy? (3mks)
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