Topic : National Income Equilibrium

3. The following table shows the equilibrium level of a three sector economy. National Taxes Disposable| Consumption| Savings | Investment Government Income Income Aggregate expenditure Expenditure 100 50 200 125 300 200 400 275 500 350 600 425 700 500 800 575 Given: Investment = RM 25 million Government expenditure = RM100 million Taxes = RM100 million (a) Complete the table. (b) Derive the consumption function and savings function. (c) Calculate the equilibrium income level. d) Sketch the equilibrium income using the aggregate expenditure - aggregate supply approach, without scale. 4. The following table shows the consumption function, taxation, government spending and investment of Countries X and Y in year 2005 (all values are in RM billion) Items Country X Country Y Consumption function C= 150 + 0.75Ya C=150 +0.75Ya Taxation T = 60 T = 0.2Y Government spending G = 75 G = 200 Investment I = 50 I= 150 (a) Calculate the equilibrium national income of Countries X and Y, respectively. (b) Draw a graph to show the equilibrium national income of Country Y, using the leakages-injection approach (c) If the government of both countries increase their government spending by RM6 billion, what will the change in equilibrium level of national income for each country be? (d) Calculate the tax multiplier for both countries