1. Consider an economy in which all taxes are autonomous and the following values of autonomous consumption, planned investment, government expenditure, autonomous taxes, and the marginal propensity to consume are given: Ca=1,400 Ip=1,800 G=1,900 Ta=1,750 c=0.6
a. What is the level of consumption when the level of income (Y) equals $10,000?
b. What is the level of saving when the level of income (Y) equals $10,000?
c. What is the level of planned investment when the level of income (Y) equals $10,000? What is the level of actual investment? What is the level of unintended inventory investment?
d. Show that injections equal leakages when income (Y) equals $10,000.
e. Is the economy in equilibrium when income (Y)=$10,000? If not, what is the equilibrium level of income described in this question?
f. Is there a surplus or deficit in the government budget at the equilibrium level of income? How much?
1. Consider an economy in which all taxes are autonomous and the following values of autonomous consumption, planned investment, government expenditure, autonomous taxes, and the marginal propensity to consume are given: Ca=1,400 Ip=1,800 G=1,900 Ta=1,750 c=0.6
a. What is the level of consumption when the level of income (Y) equals $10,000?
b. What is the level of saving when the level of income (Y) equals $10,000?
c. What is the level of planned investment when the level of income (Y) equals $10,000? What is the level of actual investment? What is the level of unintended inventory investment?
d. Show that injections equal leakages when income (Y) equals $10,000.
e. Is the economy in equilibrium when income (Y)=$10,000? If not, what is the equilibrium level of income described in this question?
f. Is there a surplus or deficit in the government budget at the equilibrium level of income? How much?
