The chart below gives the data necessary to make a Keynesian cross diagram. Assume that the tax rate is 0.4 of national income, the MPC out of after-tax income is 0.9, investment is 58, government spending is 60, exports are 40, and imports are 0.1 of after-tax income.

The chart below gives the data necessary to make a Keynesian cross diagram. Assume that the tax rate is 0.4 of national income, the MPC out of after-tax income is 0.9, investment is 58, government spending is 60, exports are 40, and imports are 0.1 of after-tax income.

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

The chart below gives the data necessary to make a Keynesian cross diagram.
Assume that the tax rate is 0.4 of national income, the MPC out of after-tax income
is 0.9, investment is 58, government spending is 60, exports are 40, and imports are
0.1 of after-tax income.
National
Income
Minus
After-tax ConsumptionI+G+X
income
Aggregate
Expenditures
Imports
100
104
200
300
400
500
600
What does consumption equal when income equals 600?

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Show full answers to the questions and steps to this exercise
Consider a Keynesian model where: exports = R10 million the marginal propensity to import out of income = 0,35 autonomous imports = R10 million the tax rate = 0,2 government spending = R25 million investment = R20 million autonomous consumption = R15 million the marginal propensity to consum = 0,75 e The equilibrium level of aggregate spending is:
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