Suppose that the following equations describe the 4-sector economy Consumption function C= 60 + 0.8 Yd, Investment function I= 100-5i, % interest rate i=6 (use 6 to compute for the investment), Government Expenditure G= 76, Lump sum Tax Tx= 15, Transfer payments TR=60, Exports X=70 Imports M=20+0.2Y 5.1. Calculate the equilibrium level of income. At this level of income, is the economy operating with a budget surplus or budget deficit? 5.2. Calculate the investment, government, tax, transfer payments and foreign trade multiplier. 5.3. Suppose that government increases its education and health services by 65, what is the new level of income?
Suppose that the following equations describe the 4-sector economy
Consumption function C= 60 + 0.8 Yd,
Investment function I= 100-5i,
% interest rate i=6 (use 6 to compute for the investment),
Government Expenditure G= 76,
Lump sum Tax Tx= 15,
Transfer payments TR=60,
Exports X=70
Imports M=20+0.2Y
5.1. Calculate the equilibrium level of income. At this level of income, is the economy operating with a budget surplus or budget deficit?
5.2. Calculate the investment, government, tax, transfer payments and foreign trade multiplier.
5.3. Suppose that government increases its education and health services by 65, what is the new level of income?
5.4. If exports increase by 10, what is the new level of income? Is the economy operating with a
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