MACROECONOMICS

Question 2 Marks: 2121 The following information is provided about an open economy with a government. Use the information to answer the questions that follow: C = 450 + DAY I: 35f] G = 15C! I = I'D Z = 35 + I[1.1"IIr T: [115? ff = 1550 [1.2.1 Calculate the level of autonomous spending in this economy. {2} (1.2.2 Calculate the size of the multiplier {4} {Note: Rou nd your answer to two decimal places] (1.2.5 Calculate the equilibrium level of income {2} {Hint: use the multiplier method} (1.2.4 Calculate the tax revenue to the government of this country when the economy {2} remains in equilibrium. (1.2.5 Calculate what the new equilibrium income should be if the government of this {5} country decides to cancel all taxes, implying the tax rate would now be {1%. (1.2.5 Before the government decreased the tax rate, how much of government {4} spending was required to bring the economy to full employment? Where C = Consumption, X = Exportation, Z = Importation, T = Tax, YF = Full employment Income