2. Given the following information. C= 600 + 0.8Y4, Ya =Y-T, Tg = 100, I= 200, R = 50, G = 350, X = 250 and M = 200 + 0.1Y. Calculate the equilibrium level of income (Y.). Show the equilibrium level of income by using diagrams of both aggregate expenditure-income (AE-Y) approach and injection-leakage approach, How much investment should be increased if the government wants to increase the national income by 2000? а. b. с.
2. Given the following information. C= 600 + 0.8Y4, Ya =Y-T, Tg = 100, I= 200, R = 50, G = 350, X = 250 and M = 200 + 0.1Y. Calculate the equilibrium level of income (Y.). Show the equilibrium level of income by using diagrams of both aggregate expenditure-income (AE-Y) approach and injection-leakage approach, How much investment should be increased if the government wants to increase the national income by 2000? а. b. с.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Given the following information.
C= 600 + 0.8Y4, Ya =Y-T, Tg = 100, I= 200, R = 50, G = 350,
X = 250 and M = 200 + 0.1Y.
Calculate the equilibrium level of income (Y.).
a.
b.
Show the equilibrium level of income by using diagrams of both aggregate
expenditure-income (AE-Y) approach and injection-leakage approach,
How much investment should be increased if the government wants to
increase the national income by 2000?
How much tax has to be reduced so that the national income will increase by
C.
d.
2000?
е.
Based on the answer in Question 2(a), if the government undertakes
expansionary fiscal policy by increasing government expenditure by 400,
calculate the new equilibrium level of income.
After being at the equilibrium level of income in Question 2(e) above, if the
government reduces the tax by 400, what is the new equilibrium level of
f.
income?
Starting with the original information above, if the government runs a
balanced budget i.e. increases the government expenditure and tax by the
same amount (AG = AT = 400 which A means changes), calculate the new
equilibrium level of income. Draw a diagram to show this situation.
g.
2.
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