Queens Republic Macroeconomics Data Values

Autonomous consumption R80 million

Autonomous investment R50 million

Autonomous net exports R70 million

Autonomous government expenditure R120 million

Marginal propensity to consume C 0.8

Proportional tax rate t 0.2

Full employment level of income R1000 million.

1. Calculate the value of the multiplier.

2. Calculate the equilibrium level of income. Round your answer off to three decimals.

3. How much additional real investment is required to bring the economy to full employment, i.e., to close the gap between real GDP and the level of GDP at full employment (ceteris paribus)? Round your answer off to three decimals.

(4 Marks)

4. Calculate the equilibrium level of consumption. Round your answer off to three decimals.