Table 2 shows elements in the national income accounts of an economy. Assume the economy is currently in equilibrium. Elements £ billions Consumption (total) 80 Investment 9 Government Expenditure 6 Imports 15 Exports 8 What is the current equilibrium level of income? What is the level of injections? What is the level of withdrawals? If national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC)What is the value of the multiplier? What is the value of the multiplier? Comment on the results in part (3) and (4).
Table 2 shows elements in the national income accounts of an economy. Assume the economy is currently in equilibrium. Elements £ billions Consumption (total) 80 Investment 9 Government Expenditure 6 Imports 15 Exports 8 What is the current equilibrium level of income? What is the level of injections? What is the level of withdrawals? If national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC)What is the value of the multiplier? What is the value of the multiplier? Comment on the results in part (3) and (4).
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy
Problem 1TY
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Table 2 shows elements in the
Elements |
£ billions |
Consumption (total) |
80 |
Investment |
9 |
Government Expenditure |
6 |
Imports |
15 |
Exports |
8 |
- What is the current equilibrium level of income?
- What is the level of injections? What is the level of withdrawals?
- If national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC)What is the value of the multiplier?
- What is the value of the multiplier?
- Comment on the results in part (3) and (4).
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national income now rises by £22 billion and as a result, the consumption of domestically produced goods rises to £80 billion. Calculate the marginal propensity to consume (MPC)What is the value of the multiplier? - What is the value of the multiplier?
- Comment on the results in part (3) and (4).
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