In early 2000, China was the fastest emerging economy in Asia. However, in recent years, China has indicated deteriorating growth beginning of 2020. Suppose consumption function for China is C = 250+ 0.6(Y-T) and taxes are T = 15+0.05Y, meanwhile investment is 250, government outlays are 400, and net-export is 300. a) What is the multiplier value for China? b) Suppose China's investment has dropped to 200, government outlays received deduction from the budget by 25% and other components are ceteris paribus. Calculate the national equilibrium new national income equilibrium. c) From the changes that happened in (b) China has reaccelerated export and import activities. This sector has contributed another $100 for net-export, meanwhile other components are ceteris paribus. Calculate national income equilibrium using multiplier approaches.

In early 2000, China was the fastest emerging economy in Asia. However, in recent years, China has indicated deteriorating growth beginning of 2020. Suppose consumption function for China is C = 250+ 0.6(Y-T) and taxes are T = 15+0.05Y, meanwhile investment is 250, government outlays are 400, and net-export is 300. a) What is the multiplier value for China? b) Suppose China's investment has dropped to 200, government outlays received deduction from the budget by 25% and other components are ceteris paribus. Calculate the national equilibrium new national income equilibrium. c) From the changes that happened in (b) China has reaccelerated export and import activities. This sector has contributed another $100 for net-export, meanwhile other components are ceteris paribus. Calculate national income equilibrium using multiplier approaches.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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