What is the value of the multiplier in the given economy

Reference no: EM131923134

Problem

1. The following data refer to a hypothetical economy: Consumption = 100 + 0.8Yd Investment = 150 Government = 200 Exports = 200 Taxation = 02Y Imports --- 0.05 Yd where Y is the level of national income.

(a) Find the equilibrium level of national income, using both the aggregate-demand and injection-leakages approaches. Illustrate your answer with the appropriate graphs.

(b) Is there a budget surplus or budget deficit at the equilibrium level of income?

(d) What is the value of the multiplier in this economy?

(e) If exports increase to 250, what is the new equilibrium level of income? (f) In the original situation, if the government introduced transfer payments by 200, what is the new equilibrium level of income?

2. Why is the balanced budget multiplier equal to 1?

Reference no: EM131923134

Questions Cloud

What is the car average acceleration : What is the car's average acceleration (in SI units; meter-kilogram-second)?

Why might the given information help to lead to conclusion : Why might this information help to lead to the conclusion that milk is a suitable item to be subsidized by the government?

Define the type of plan : You are up for a promotion at work, and after the interview process, the office manager has narrowed it down to yourself and 1 other candidate.

Find the image distance and magnification : A convex lens has a focal length of 7.4321 cm. The object distance is 9.55556 cm. Find the image distance and magnification

What is the value of the multiplier in the given economy : Is there a budget surplus or budget deficit at the equilibrium level of income? What is the value of the multiplier in this economy?

How long will the plastic tube need to be : How long will the plastic tube need to be? How many kilometers of copper wire will be required? What will be the resistance of this solenoid?

Distinguish between endogenous and exogenous variables : Using examples from the national income model outlined in this chapter, distinguish between endogenous variables and exogenous variables.

Explain what is her total income if she accepts promotion : What is her total income before the promotion? Explain what is her total income if she accepts the promotion?

How does a chemist define a metal : Chemists use the term "metals" differently than we do in everyday conversation. How does a chemist define a metal?

User Account

All Pages