(b) If the govemnment has increased its spending by RM 80, what is the amount ofautonomous tax that is required so that the government's action in increasing itsspending does NOT have an impact on the government's budget balance?Answer : AT* = A 3-sector economic model was constructed and solved, and assuming the parameterstake on certain values, the multiplier matrix that is obtained is displayed in Table 1.You are required to answer the following questions by showing your calculation inthe space provided.Table 1: Multiplier MatrixExogenous VariablesEndogenous VariablesI*G*T*: Output: Consumption Expenditure 1.895Y2.6312.631- 2.105C1.895- 2.316TTax Revenue0.2630.2630.789YD : Disposable Income2.3682.368- 2.895В: Government Budget0.263- 0.7370.789BalanceS: Saving0.4740.474- 0.579(a) If autonomous investment is reduced by RM100, justify its precise impact ondisposable income and tax.Answer : AYD=AT =

Answered: ment has increased its spending by RM…

ment has increased its spending by RM 80, what is the amou ax that is required so that the govemment's action in increasir NOT have an impact on the government's budget balance?

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

(b) If the govemnment has increased its spending by RM 80, what is the amount of
autonomous tax that is required so that the government's action in increasing its
spending does NOT have an impact on the government's budget balance?
Answer : AT* =

A 3-sector economic model was constructed and solved, and assuming the parameters
take on certain values, the multiplier matrix that is obtained is displayed in Table 1.
You are required to answer the following questions by showing your calculation in
the space provided.
Table 1: Multiplier Matrix
Exogenous Variables
Endogenous Variables
I*
G*
T*
: Output
: Consumption Expenditure 1.895
Y
2.631
2.631
- 2.105
C
1.895
- 2.316
T
Tax Revenue
0.263
0.263
0.789
YD : Disposable Income
2.368
2.368
- 2.895
В
: Government Budget
0.263
- 0.737
0.789
Balance
S
: Saving
0.474
0.474
- 0.579
(a) If autonomous investment is reduced by RM100, justify its precise impact on
disposable income and tax.
Answer : AYD=
AT =

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