1. The Turkish economy is known to be the largest producer of hazelnuts and cherries in the world. Assume their economy can be described by the following:

Consumption (C)=80+0.75Y_d Investment (I)= 200

Government Spending (G)=350 Taxes (T) =380

Exports (EX)= 150 Imports (IM)=0.25 Y_d

Dispoable Income Y_d=Y-T

a. Determine the amount of surplus/deficit in the economy. (1.5 marks)

b. Calculate equilibrium output in this economy. (1.5 marks)

c. Suppose government spending increased by 50, calculate the new equilibrium level. (1.5 marks)

d. Illustrate your answer in (c-d) on a well labelled diagram. (1.5 marks)

1. The Turkish economy is known to be the largest producer of hazelnuts and cherries in the world. Assume their economy can be described by the following:

Consumption (C)=80+0.75Y_d Investment (I)= 200

Government Spending (G)=350 Taxes (T) =380

Exports (EX)= 150 Imports (IM)=0.25 Y_d

Dispoable Income Y_d=Y-T

a. Determine the amount of surplus/deficit in the economy. (1.5 marks)

b. Calculate equilibrium output in this economy. (1.5 marks)

c. Suppose government spending increased by 50, calculate the new equilibrium level. (1.5 marks)

d. Illustrate your answer in (c-d) on a well labelled diagram. (1.5 marks)

The Turkish Bank Limited (TBL) has been informed by the central bank that the required reserve ratio is 10%.Assume that the banking system has $20 million in deposits and $5 million in reserves.

e. Calculate the required reserves. (1 mark)

f. Compute the excess reserves. (1.5 marks)

g. Determine the maximum amount by which demand deposits could expand. (1.5 marks)