Question 1

Table 2 shows elements in the national income accounts of an economy. Assume the economy is currently in equilibrium.

Elements	billions
Consumption (total)	80
Investment	9
Government Expenditure	6
Imports	15
Exports	8

Table 2

A)What is the current equilibrium level of income?

B)What is the level of injections? What is the level of withdrawals?

C)If national income now rises by 22 billion and as a result, the consumption of domestically produced goods rises to 80 billion. Calculate the marginal propensity to consume (MPC).

D)What is the value of the multiplier?

E)Comment on the results in part (c) and (d).