1. With reference to the above diagram, calculate the equilibrium level of income after the introduction of government spending and proportional income tax. Show all calculation steps. 2. With reference to the above diagram, if national income (Y) is R500 million, calculate the induced consumption after the introduction of government spending and proportional income tax. Show all calculation steps

1. With reference to the above diagram, calculate the equilibrium level of income after the introduction of government spending and proportional income tax. Show all calculation steps. 2. With reference to the above diagram, if national income (Y) is R500 million, calculate the induced consumption after the introduction of government spending and proportional income tax. Show all calculation steps

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Y₁
Total production, income, millions of rands per year
Y₂ Y₂
Aggregate spending, millions of rands per year
350
Show Transcribed Text
180
A₁-C+1-150 +0.5Y
A₂=C+I+G = 180 +0.5(1-0.3)Y
A₂=C+I+G = 180 +0.5Y
1. With reference to the above diagram, calculate the equilibrium level of income after the introduction of government
spending and proportional income tax. Show all calculation steps.
2. With reference to the above diagram, if national income (Y) is R500 million, calculate the induced consumption after the
introduction of government spending and proportional income tax. Show all calculation steps

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