2.Given the following information.C = 600+ 0.8Yd, Yd=Y-T, Tg = 100, l= 200, R = 50, G = 350,X = 250 and M = 200+ 0.1Y.a. Calculate the equilibrium level of income (Ye).b. Show the equilibrium level of income by using diagrams of both aggregateexpenditure-income (AE-Y) approach and injection-leakage approach,c. How much investment should be increased if the government wants to increasethe national income by 2000?d. How much tax has to be reduced so that the national income will increase by2000?e. Based on the answer in Question 2(a), if the government undertakesexpansionary fiscal policy by increasing government expenditure by 400, calculatethe new equilibrium level of income.f. After being at the equilibrium level of income in Question 2(e) above, if thegovernment reduces the tax by 400, what is the new equilibrium level of income?g. Starting with the original information above, if the government runs a balancedbudget i.e. increases the government expenditure and tax by the same amount(AG = AT = 400 which A means changes), calculate the new equilibrium level ofincome. Draw a diagram to show this situation.

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C = 600+ 0.8Yd, Yd=Y-T, Tg = 100, l= 200, R = 50, G = 350, X = 250 and M = 200+ 0.1Y. a. Calculate the equilibrium level of income (Ye). b. Show the equilibrium level of income by using diagrams of both aggregate expenditure-income (AE-Y) approach and injection-leakage approach, c. How much investment should be increased if the government wants to increase the national income by 2000?

C = 600+ 0.8Yd, Yd=Y-T, Tg = 100, l= 200, R = 50, G = 350, X = 250 and M = 200+ 0.1Y. a. Calculate the equilibrium level of income (Ye). b. Show the equilibrium level of income by using diagrams of both aggregate expenditure-income (AE-Y) approach and injection-leakage approach, c. How much investment should be increased if the government wants to increase the national income by 2000?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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