4G8:20 AMAssignment 2.. oAssignment 2ЕCО 103 Н (Sос)Set 1: Equilibrium output1.government. Suppose the consumption function is given by C = 100 + .8Y, while investmentis given by I = 50.What is the equilibrium level of income in this case?b. What is the level of saving in equilibrium?c. If, for some reason, output is at the level of 800, what will the level of involuntary in-a.ventory accumulation be?d. If I rises to 100 (we discuss what determines I in later chapters), what will the effect beon the equilibrium income?e. What is the value of the multiplier, a, here?f. Draw a diagram indicating the equilibria in both (a) and (d).2.Suppose the consumption behavior in problem 1 changes so that C = 100 + .9Y, whileremains at 50.a. Is the equilibrium level of income higher or lower than it was in problem 1(a)? Calculatthe new equilibrium level, Y', to verify this.b. Now suppose investment increases to I = 100, just as in problem 1(d). What is the neequilibrium income?c. Does this change in investment spending have more or less of an effect on Y than it did iproblem 1? Why?d. Draw a diagram indicating the change in equilibrium income in this case.Set 2: Money1Illustrate the tools of money supply.2. Explain the functions of the central bank.3. Distinguish between demand pull and cost push inflation.4. Define with example: Structural unemployment, Frictional unemployment, cyclicalunemployment.

Formula to calculate income level= AS= AD The formula becone Y= C +I

Answered: Set 1: Equilibrium output 1.…

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Set 1: Equilibrium output 1. government. Suppose the consumption function is given by C = 100 + .8Y, while investmen

ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question 1: In the case of a 2 sector economy model, when the income increases from RM 400 mil to RM 450 million, consumption increases from 200 million to 230 million. The autonomous investment is RM100 million. Assume autonomous consumption is 1.1) Calculate the value of MPC 1.2) Calculate the value of MPS 1.3) Derive consumption function, if the autonomous consumption is RM100 million 1.4) Construct saving function, if the autonomous saving is RM100 million Question 2: Given the following information C=200 + 0.75Y I=100 G=50 T=100 X=100 M=50 Find the equilibrium income by using the formula of Y = C + I + G + (X – M) Question 3: The following information is about monetary items for the country. ITEMS RM(Million) Paper money 5500 Negotiable certificate of deposit 3600 Fixed & savings deposits in other banking institutions 7900 Fixed & savings deposits in commercial banks 15000 Demand deposits 9000 Bank Negara Certificates 12000…
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