Given: C = 250 + 0.8 Y (6 x 2 = 12) I = 150 G = 300 TR = 100 NX = 100 t =0.25 i) Find the equilibrium level of income. ii) Suppose, b 50, MPS falls to .05, I falls to 10, G falls to 100 and NX falls to 10. How much TR should the government increase to have the same level of equilibrium income as in part i)? iii) In determining the required change in TR in part ii), which multiplier did you use and why? (Hint: keep in mind the consumption tendency households may have under the COVID 19 situation in selecting the multiplier).
Optimization
Optimization comes from the same root as "optimal". "Optimal" means the highest. When you do the optimization process, that is when you are "making it best" to maximize everything and to achieve optimal results, a set of parameters is the base for the selection of the best element for a given system.
Integration
Integration means to sum the things. In mathematics, it is the branch of Calculus which is used to find the area under the curve. The operation subtraction is the inverse of addition, division is the inverse of multiplication. In the same way, integration and differentiation are inverse operators. Differential equations give a relation between a function and its derivative.
Application of Integration
In mathematics, the process of integration is used to compute complex area related problems. With the application of integration, solving area related problems, whether they are a curve, or a curve between lines, can be done easily.
Volume
In mathematics, we describe the term volume as a quantity that can express the total space that an object occupies at any point in time. Usually, volumes can only be calculated for 3-dimensional objects. By 3-dimensional or 3D objects, we mean objects that have length, breadth, and height (or depth).
Area
Area refers to the amount of space a figure encloses and the number of square units that cover a shape. It is two-dimensional and is measured in square units.
Given: C = 250 + 0.8 Y (6 x 2 = 12)
I = 150
G = 300
TR = 100
NX = 100
t =0.25
i) Find the equilibrium level of income.
ii) Suppose, b 50, MPS falls to .05, I falls to
10, G falls to 100 and NX falls to 10. How much TR should the government increase to have
the same level of equilibrium income as in part i)?
iii) In determining the required change in TR in part ii), which multiplier did you use and why?
(Hint: keep in mind the consumption tendency households may have under the COVID 19
situation in selecting the multiplier).
iv) Draw a graph to show the appropriate changes between part i) and part ii).
v) Instead of paying transfer (TR) if the government were to increase government spending (G),
what type of crowding out would you expect? Briefly explain.
vi) As we have observed recently that, a lot of the assistance from the government is being
misappropriated by dishonest individuals and as a result is not reaching the target population.
What role can proper institution play to rectify such mishandling of government fund? Explain.
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