Question: Consider the consumption function: C = 100 + .8Yd Where C represents consumption and Y represents income. To begin, assume there is no government and

Consider the consumption function:

C = 100 + .8Yd

Where C represents consumption and Y represents income. To begin, assume there is no government and taxation, investment is given by I=50.

a. What is the equilibrium level of income in this case? What is the equilibrium level of Saving and consumption in this economy?

b. Suppose Government expenditure is rise by RS 3489, Investment by 250 and Net export is -30 and tax rate is imposed by 5% of Y. what will be the equilibrium level of income in this case? What will the equilibrium level of Saving and consumption in this economy?

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Economics Questions!

Suppose during a year, in the country United States, Personal Consumption Expenditures was $ 15 trillion, Private investment and the corporate spending on the non-final capital goods was $4 trillion,...

What is the benefit to maintaining price stability within a country? Select one: a. Consumers and businesses can safely pursue long-term consumption and production plans. b. Expansion in national...

1. Most economists believe that the source of European high unemployment in the past two decades is A) labor market institutions. B) tight monetary policy. C) tight fiscal policy. D) financial...

questions are in the picture 3. Consider an economy described by the following equations: Y = C + I + G + X (Income identity) C = 300 + .8 Yd (Consumption) with investment I = $300, government...

Kindly solve the questions attached Question 2 (20 points} Chapters 4 & S Home is a small open economy with perfect capital mobility. Initially, it is in its long-run equilibrium and domestic and...

4. Consider a consumption function given by C = 0.8Y + 2000 d Assignment 3- EC0211 Assume first a closed economy with no government. (Then income = disposable income) a. If investment is x, draw the...

S h o w yo u r w or k . Answer the questions. In 2016, a country's GDP is $214.8 billion. If the economy experiences 4% economic growth over each of the next two years, what will the be the value of...

Part A. Production Problem 1. Consider the Cobb-Douglas production function f(x,y) = 12x0.4y0.8. (A) Find the intensities (? and 1 ? ?) of the two factors of production. Does this firm have...

Question one. 1. The following table shows the quantities of corn supplied and demanded at different prices. Price per Ton Quantity Supplied Quantity Demanded $80 700 1,200 85 800 1,100 90 900 900 95...

Question 1 Not yet answered Marked out of 1.00 Flag question Question text In the simple aggregate expenditure model where all components of aggregate expenditure are autonomous except consumption,...

Explain how glucose represses the lactose operon.

For the relation on the set {1, 2, 3, 4}, decide whether it is reflexive, whether it is symmetric, whether it is anti-symmetric, and whether it is transitive. In order to get full credits: For...

A _ _ _ _ _ _ _ _ the condition that exists when data are isolated in separated information systems. Select one: A . database B . data silo C . information silo D . functional information system

An area of pricing ethics that has received little attention is in Internet pricing. The practice of charging more or less in some physical areas than others, based on the buying power of the area,...

7. Give examples of information-overload from your everyday life. Review the six consequences that information-overload can lead to and discuss the examples in relation to all the six points.

6. What does it mean when we say that our interpretation of information is dependent on our prior knowledge and our values?

8. Based on a strategy that is used at your workplace, find information that goes against this strategy.