Question
Assume the following economy: Autonomous Consumption = 5 million; Marginal Propensity to Consume = 0.75; Business Investment = 60 million; Government spending = 100 million
Assume the following economy: Autonomous Consumption = 5 million; Marginal Propensity to Consume = 0.75; Business Investment = 60 million; Government spending = 100 million and income tax rate = 20%.
A. Find the equilibrium size of income Y.
B. Identify whether the government runs a budget deficit or a budget surplus.
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Exploring Economics
Authors: Robert L Sexton
5th Edition
978-1439040249, 1439040249
