B) In a closed economy, the functions for consumption, investment, governmentexpenditure and taxation are given as below (in RM million).Consumption function: C=500 + 0.75 YdInvestment function| = 800Government expenditure:G = 400Тахation:T= 200 + 0.2 Yi.Find the equilibrium level of national income for the economy statedabove.ii.Draw a graph to show the equilibrium of national income by using AD=ASapproach.Find the total value of taxation when the national income is at equilibrium.iii.

B) In a closed economy, the functions for consumption, investment, government expenditure and taxation are given as below (in RM million). Consumption function : C=500 + 0.75 Yd Investment function : I = 800 Government expenditure :G = 400 Taxation :T = 200 + 0.2 Y i. Find the equilibrium level of national income for the economy stated above. ii. Draw a graph to show the equilibrium of national income by using AD=AS approach. Find the total value of taxation when the national income is at equilibrium. ii.

B) In a closed economy, the functions for consumption, investment, government expenditure and taxation are given as below (in RM million). Consumption function : C=500 + 0.75 Yd Investment function : I = 800 Government expenditure :G = 400 Taxation :T = 200 + 0.2 Y i. Find the equilibrium level of national income for the economy stated above. ii. Draw a graph to show the equilibrium of national income by using AD=AS approach. Find the total value of taxation when the national income is at equilibrium. ii.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question 1 Given the following data on simple closed economy: C= 10 + 0.75 Y I= 20 G= 40 where C is aggregate consumption, Y is national income, G is government expenditure on goods and services, and I is investment expenditure. Note: There is no taxes assumed in parts (i) to (iii). ) What is the equilibrium level of national income? Show all your workings. (ii) What is the value of aggregate consumption and the value of aggregate savings at the equilibrium level of the national income? Show all your workings. ( (iii)What would be the new level of national income if government expenditure increased by 10? Show all your workings.
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The slope of the line between points a and b is 4 .25 -4 -.25
The public consumption function of a country (a three-sector economy) is C = 60 + 0.6Yd. The government receives a tax of 40 from the people, but also provides transfer payments of 30 to its citizens. While government spending is 100, and investment realized is 50. Determine the balance national income.
Which of the following is true: a) at equilibrium aggregate expenditure is greater than gross domestic expenditure. b) at equilibrium GDP is greater than gross domestic expenditure. c) at equilibrium aggregate expenditure is smaller than gross domestic expenditure. d) at equilibrium GDP is smaller than gross domestic expenditure or e) at equilibrium both aggregate expenditure and GDP are smaller than gross domestic expenditure
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From the information above, calculate the level of consumption and saving that occurs at the equilibrium level of income.
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A simple closed economy with government sector is given by the following equations: C = 10 + 0.75 Y I = 20 G = 40 where C is aggregate consumption, Y is national income, G is government expenditure on goods and services, and I is investment expenditure. Note that there are no taxes assumed in parts (a) to (c). (a) What is the equilibrium level of national income? Show all your workings. (b) What is the value of aggregate consumption and the value of aggregate savings at the equilibrium level of the national income? Show all your workings. (c) What would be the new level of national income if government expenditure increased by 10? Show all your workings and explain the mechanisms through which the economy reaches a new equilibrium. (d) If a tax rate of 1/3 of national income were introduced, what would be the new equilibrium level of national income in the economy outlined above. Show all your workings and explain the mechanisms through which the economy reaches the new equilibrium.
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