If taxes then increase byR100, cT will be R80, thenew equilibrium level ofoutput and income willbe R1 100, and it will berepresented by point cin the above diagram.B. The above diagram andquestions imply theworking of the balancedbudget multiplier.C. Although there is anincrease of R100 intaxes, there will be stillan expansionary neteffect of R500 on theequilibrium level ofoutput and income.D. If government spendingincreases by R100, theequilibrium level ofoutput and income willbe R1 500, and the Zcurve will shift to Z1. This question is based on thefollowing diagram. Assumethat G and T increase byR100.Z2202000AG = 10045°ACT = ?1000Which one of the followingstatements is INCORRECT?10080Z₁Z₂ZY

Aggregate demand refers to the total demand for commodities and services made by all the economic…

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This question is based on the following diagram. Assume that G and T increase by R100. Z 220 200 AG = 100 45° ACT = ? 0 Which one of the following statements is INCORRECT? 1000 100 80 Z₁ NN Y

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

If taxes then increase by
R100, cT will be R80, the
new equilibrium level of
output and income will
be R1 100, and it will be
represented by point c
in the above diagram.
B. The above diagram and
questions imply the
working of the balanced
budget multiplier.
C. Although there is an
increase of R100 in
taxes, there will be still
an expansionary net
effect of R500 on the
equilibrium level of
output and income.
D. If government spending
increases by R100, the
equilibrium level of
output and income will
be R1 500, and the Z
curve will shift to Z1.

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