Question 5 [20] 5.1. Read the scenario below in order to answer the questions that follow. ECONOMY A The establishment of macroeconomics as a specific field of study occurred following the Great Depression of the 1930s. The published work of John Maynard Keynes, The General Theory of Employment, Investment and Money, laid the foundation of macroeconomics. Consider the following Keynesian model for an economy: C = C+ CY C=C+ CYd = C+ 01-ny Consumption spending C Total income where C = 250 million + 0.9Yd 1 = 175 million G = 310 million X = 170 million Z = 120 million T = 0,25Y YF = R3 100 million Equilibrium income: Y = C +1 + G+ (X - Z) Disposable income: Yd = (1 - t)Y NOTE: A proportional income tax reduces the disposable income of households and, therefore, also their consumption spending which forms part of aggregate spending in the economy. The introduction of a proportional income tax thus reduces aggregate spending, ceteris paribus. 5.1.1. Calculate the multiplier. (3) 5.1.2. Calculate the equilibrium level of income using the calculated value of the multiplier in 5.1.1. (3) 5.1.3. By approximately how much must investment spending be raised to achieve full employment? (4) 5.1.4. Differentiate between the multiplier without proportional income tax and the multiplier with proportional income tax. (4)