° Consider the following Open Economy with the following parameters, in billions: Consumption (C) = 500 + .75(Yo). Government Spending (G) = 800. Personal Disposable Income (YD) = Y - T + TR Transfers (TR) = 400. Taxes (T) = (1/3)Y. Investment (I) = 400. Exports (X) = 200. In this Economy, Equilibrium Income is Spending/Investment Multiplier is Imports (IM) = 400. the Government Budget is and the Government Select one: a. 3600 billion, balanced, 2 b. 6000 billion, Surplus of 600 billion, 4 c. 3600 billion, Surplus of 80 billion, 4 d. 4500 billion, Surplus of 100 billion, 2.5 e. 2600, Deficit of 333 billion, 4

C= 26 +0.75Y = 60 X = 24 M = 10 (Advanced analysis) The equations give information for a private open economy. The letters Y, C, I, X, and M stand for GDP, consumption, gross investment, exports, and imports, respectively. Figures are in billions of dollars. The multiplier for the economy is 4.6. 3.33. 5.0. 4.0.

Question 1

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In the country of Borealis, the minimum amount of consumption spending that will occur is $300 - that is, no matter what level of income households have, the aggregate amount of consumption spending in the economy will be at least $300. In addition, for every extra dollar of national income, consumption spending will increase by $0.75.

(a) Assume that Gross Domestic Product (GDP)/Total output (Y) is 6,000. Consumption (C) is given by the equation C = 600 + 0.6(Y – T) where T is the tax. Investment (I) is given by the equation I = 2,000 – 100r, where r is the real rate of interest, in percent. Taxes (T) are 500, and government spending (G) is also 500. What are the equilibrium values of C, I, and r?

Given the following model of an Economy as follows:- (10 marks) C = 50 + 0.7 Yd (Yd = Y-T) (Consumption & Expend) I = 100 (Investment Expend) X = 20 (Exports ) M = 10 – 0.27 (Imports) T=25 interepret the consumption Function i) Determine Equilibrium level of National Income ii) Consumption level at Equilibrium level of Income iii) Total import at equilibrium Income

In a simple economy where there is no government and no international trade, the consumption function is given by the equation: C = £130m + 0.7Y What is the marginal propensity to save? a)0.7 b)1.0 c)0.3 d)130

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Suppose that the level of income is $1000 and the tax rate is 0.1 %. Given this data, what is the level of disposable income?   Use the following information to answer questions 5 through 8: Consider the following information for Slovenia. Category Amount Autonomous Consumption 430 MPC 0.9 Tax Rate 0.25 Investment 800 Government Expenditure 100 Exports 20 MPI 0.05   What is the equilibrium level of GDP in the income-expenditure model?   Suppose that there is a decrease in Exports by $20. What is the new equilibrium level of GDP in the income-expenditure model?   What is the difference between the original and new GDP as a result of a decrease in Exports?   Suppose that MPC is equal to 0.8. What is the spending multiplier?