Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need some enlightenment here. Hope you can help me. Thank you. 2. Suppose that for a particular economy and period, investment was equal to

image text in transcribed

I need some enlightenment here. Hope you can help me. Thank you.

image text in transcribed
2. Suppose that for a particular economy and period, investment was equal to 100. government expenditure was equal to 75. net taxes were fixed at 100, and consumption (C ) was given by the consumption function C=25+0.8YD where YD is disposable income and Y is GDP. 2.1. What is the level of the equilibrium level of income? (Y) Is the economy running with a trade deficit or trade surplus? How much? 2.2. What is the value of the government expenditure multiplier? Of the tax multiplier? 2.3. Suppose that investment declined by 40 units to a level of 60. What will be the new equilibrium level of income? 3. Suppose that initially equilibrium income was 200 units and that this was also the full employment level of income. Assume that the consumption function is C=25+0.80YD and that, from the initial equilibrium level of income. we have now investment decline of 8 units? What will be the new equilibrium level of income? What increase in government spending would be required to restore income to the initial level of 200? AlternativelyI what reduction in tax collection would be sufcient to restore an income level of 200? 4. Suppose that the following equations describe the economy of the country of the Philippines. C: 500 + 0.8 (Y - T), I: 200, G= 300, NX= 50. T: 200. Yr: 5000: where C=oonsumption level, I=investment. G=govemment expenditures, NX=net exports, T=taxes and Y=full employment outputncome. Use this information to find each of the following: 4.1. Investment, government and tax multiplier. 4.2. Equilibrium outputncome. 4.3. The output gap. 4.4. By how much would government expenditures have to change to eliminate the output gap? 5. Suppose that the following equations describe the 4-sector economy Consumption function G: 60 + 0.8 Yd, Investment function I: 100-5i. % interest rate i=6 (use 6 to compute for the investment)I Government Expenditure G: 76. Lump sum Tax Tx= 15, Transfer payments TR=60. Exports X=70 Imports M=20+0.2Y 5.1. Calculate the equilibrium level of income. At this level of income, is the economy operating with a budget surplus or budget deficit? 5.2. Calculate the investment, government, tax. transfer payments and foreign trade multiplier. 5.3. Suppose that government increases its education and health services by 65, what is the new level of income? 5.4. If exports increase by 10. what is the new level of income? Is the economy operating with a trade deficit or surplus at this level of income

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Foundations Of Global Financial Markets And Institutions

Authors: Frank J. Fabozzi, Frank J. Jones, Francesco A. Fabozzi, Steven V. Mann

5th Edition

0262039540, 978-0262039543

More Books

Students also viewed these Economics questions

Question

What are the pros and cons of using a workaround?

Answered: 1 week ago

Question

Were multiple treatments used? Did they interfere with each other?

Answered: 1 week ago