Question 5[15]

Answer the questions below by using the Keynesian model:

= R20 million

= R300 million

= R180 million

c= 0,875

t= 0,143

T = 0,143Y

Yf= R2400 million

5.1.What is the value of the marginal propensity to consume in this model?(1)

5.2.Calculate the multiplier.(3)

5.3.Calculate the equilibrium level of income, using the calculated value of the multiplier in 5.2.(3)

5.4.How much does the government collect in taxes when the economy is in equilibrium? (2)

5.5.Is the government currently running a surplus or a deficit? (2)

5.6.By approximately how much must government spending be raised to achieve full employment?(4)