Table 2 shows the elements of national income accounts of a country. The economy is in equilibrium. Accounts Consumption (total) Investment Government Expenditures Imports Exports £bn 80 12 8 10 16 A) What is the current equilibrium value of national income? B) What are the levels of injections and withdrawls? C) Assume that the national income rises to £108 bn and the consumption of the domestically produced goods rises to £72 bn. What is the marginal propensity to consume (use 2 decimal places)? D) What is the multiplier for this economy? E) Comment on the results in part c) ad d).
Table 2 shows the elements of national income accounts of a country. The economy is in equilibrium. Accounts Consumption (total) Investment Government Expenditures Imports Exports £bn 80 12 8 10 16 A) What is the current equilibrium value of national income? B) What are the levels of injections and withdrawls? C) Assume that the national income rises to £108 bn and the consumption of the domestically produced goods rises to £72 bn. What is the marginal propensity to consume (use 2 decimal places)? D) What is the multiplier for this economy? E) Comment on the results in part c) ad d).
Chapter16: Country Risk Analysis
Section: Chapter Questions
Problem 17QA
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Transcribed Image Text:Table 2 shows the elements of national income accounts of a country. The economy is in
equilibrium.
Accounts
Consumption (total)
Investment
Government Expenditures
Imports
Exports
£bn
80
12
8
10
16
A) What is the current equilibrium value of national income?
B) What are the levels of injections and withdrawls?
C) Assume that the national income rises to £108 bn and the consumption of the
domestically produced goods rises to £72 bn. What is the marginal propensity to
consume (use 2 decimal places)?
D) What is the multiplier for this economy?
E) Comment on the results in part c) ad d).
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