Government expenditure multiplier

Assignment Help Business Economics

Reference no: EM137095

Suppose that for a particular economy and period, investment was equal to 100, government expenditure was equal to 75, net tax were fixed at 100, and consumption (C) was given by the consumption function C = 25 + 0.8YD where YD is disposable income and Y is GDP.

a. What is the level of equilibrium income(Y)?

b. What is value of the government expenditure multiplier (ΔY/ΔG)? Of the tax multiplier (ΔY/ΔT)?

c. Suppose that investment decline by 40 units to a level of 60. What will be the new level of equilibrium income?

Reference no: EM137095

Questions Cloud

Engineers income generation : Give a detailed explanation about how the engineer's income generation as described above affects GDP and GNP of U.S.

Stock market interest and investment. : Using your understanding of the financial system, the demand for money, banking and the money provide, interest and spending, the stock market, interest and investment.

Paper sold in competitive market : Elucidate is the efficient yearly output of paper and how can this be achieved.

Short-run equilibrium price : What is the short-run equilibrium price. What is the short-run equilibrium market quantity.

Government expenditure multiplier : Suppose that investment decline by 40 units to a level of 60. What will be the new level of equilibrium income.

Exchange rates and economic policy : Discuss in detail, the impact that currency movements are having on the economic data that you are collecting in Part A.

Nations gdp : Exportof goods and services to foreigners is $1 million and import of goods and services from foreigners is $1.5 million.

Investment criteria mario brothers : Comparing Investment Criteria Mario Brothers, a sport producer, has a new idea for an exploration sport.

Equation for marginal revenue : Find the level of output with the help of calculus, Qrmax, where total revenue reaches its maximum value.

User Account

All Pages