Determine the level of income

Reference no: EM1374547

Suppose you have been appointed economic advisor to Exam land. The mpc is 0.6; investment is $1000; government spending is $8000; consumption is $10000; and next exports are $1000.
a. Determine the level of income in the nation?
b. Net export increases by $2000. What will happen to income?
c. What will happen to unemployment? (Remember Okun's rule of thumb)

9. Let D be the quantity of demand, S be the quantity of supply and P be the price in US dollars. The relationship between Quantity of demand and price can be represented by:
D = 10 - 2*P, While the relationship between supply and price is S = 2 + 3*P

a. Determine the equilibrium price? What is the equilibrium quantity of supply and demand?
b. If the government set the price to 3, will there be surplus supply or surplus demand? What is the quantity of surplus demand or surplus demand?

Reference no: EM1374547

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