Question
Please help me check if my formulas are correct and provide the working for all questions. I have been shown different formulas for the same
Please help me check if my formulas are correct and provide the working for all questions. I have been shown different formulas for the same question so i am unsure i am correct
Consumption expenditure = $180 b
Planned investment = $30 b
Government expenditure = $27 b
Export expenditure = $84 b
Import expenditure = $73 b
Autonomous taxes = $12 b
Income tax rate = 17%
Marginal propensity to save = 0.3
Marginal propensity to import = 0.1
Part (1)
If income currently equals $245b calculate the level of autonomous consumption (solve to two decimal places).
C=Ca+c(Y-T)? OR C+Ca+MPC(Yd)
Part (2)
Calculate the level of total savings when the level of income is equal to $245 b (solve to two decimal places).
S=Y-C OR
S = Yd-C
= (Y-T)-C
Part (3)
Calculate autonomous net exports when income is equal to $245b (solve to two decimal places).
Part (4)
Calculate the level of actual investment AND unplanned investment when income is equal to $245 b (solve answers to two decimal places).
Part (5)
Calculate autonomous planned expenditure for this economy (solve to two decimal places).
Ap+Ca-cTa+Ip+G+NXa?
Part (6)
Is this economy in equilibrium when income equals $245 b? If not, what is the equilibrium level of income for this economy? (solve to two decimal places).
Y=k*Ap
k=1/(1-c)+ct+nx?
c=1-MPS
Part (8)
Calculate the tax multiplier for the economy (solve to two decimal places).
Kt = -c/(1-c)+ct+nx OR -MPC/1-MPC
Part (9)
Assume that the government decides to change autonomous taxes in order to achieve equilibrium income. Will it need to raise, lower or leave unchanged autonomous taxes to achieve this? If autonomous taxes do need to change by how much do they need to be raised or lowered for the economy to be in equilibrium (solve to two decimal places).
Y = MPC x T OR Y = Yf - Ye, Y = k* G, G = Y k
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