From the following data, calculate national income by income method Items(Units of m) 1.Compensation of employees800 2.Mixed
Question:
From the following data, calculate national income by income method
Items(Units of m)
1.Compensation of employees800
2.Mixed income of self-employed900
3.Net factor income from abroad - 50
4.Rent350
5.Profit600
6.Consumption of fixed capital200
7.Net indirect taxes250
8.Interest450
9.Operating Surplus1400
b.) From the following data, calculate national income by expenditure method. (7mks)
Items(000)
1. Compensation of employees1,200
2. Net factor income from- 20
3. Net indirect taxes120
4. Profit800
5. Private final consumption expenditure2,000
6. Net domestic capital formation770
7. Consumption of fixed capital130
8. Rent400
9. Interest620
10. Mixed income of self-employed700
11. Net exports- 30
12. Govt. final consumption expenditure1,100
13. Operating surplus1820
14. Employer's contribution to social security Scheme300
2.) Given a hypothetical consumption function of the form:
Y = C + I0 + G0
C = +
Where:= Y - T
Y = Income
T = Taxes
Compute the equilibrium level of income and consumption
3.) You are given the following hypothetical information about the Commodity and Money markets of a closed economy without government intervention.
The commodity market
Consumption function:C = 100 + 0.3Y
Investment function: I = 2,000 - 2.1r
The Money Market
Lt = 0.2Y (transaction demand for money function)
Ls = 10 - 2r (speculative demand for money function)
MS = 1,500 (money supply function)
a.)Derive the IS curve.
b.)Derive the LM curve
c.)Derive the equilibrium level of income and rate of interest.
d.)If the money supply is increased by 75, what would be the effect on the equilibrium level of income and rate of interest?