arginal Propensity to Consume: 0.4, Investment: 10000, Government Spending: 30000 et Exports: 5000, Income Tax rate: 25%. The government wishes to conduct an injection to the economy to achieve a 45000 increase in national income. a) Calculated the current equilibrium income in the economy b) The government increases spending by 30000. Does this achieve the desired increase of 45000? c) How much should the government increase its spending to achieve the 4500C increase in national income (to the nearest whole number)? (Hint: consider the what the multiplier in this economy is)
arginal Propensity to Consume: 0.4, Investment: 10000, Government Spending: 30000 et Exports: 5000, Income Tax rate: 25%. The government wishes to conduct an injection to the economy to achieve a 45000 increase in national income. a) Calculated the current equilibrium income in the economy b) The government increases spending by 30000. Does this achieve the desired increase of 45000? c) How much should the government increase its spending to achieve the 4500C increase in national income (to the nearest whole number)? (Hint: consider the what the multiplier in this economy is)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:The current state in the economy are as follows; Autonomous Consumption: 9000,
Marginal Propensity to Consume: 0.4, Investment: 10000, Government Spending: 30000,
Net Exports: 5000, Income Tax rate: 25%. The government wishes to conduct an injection
into the economy to achieve a 45000 increase in national income.
a) Calculated the current equilibrium income in the economy
b) The government increases spending by 30000. Does this achieve the desired
increase of 45000?
c) How much should the government increase its spending to achieve the 45000
increase in national income (to the nearest whole number)? (Hint: consider the what
the multiplier in this economy is)
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