Answer to Question #144520 in Macroeconomics for Blue

Question

Team Justice economy has exports of K6000 and marginal propensity to import of 0.2. Its
autonomous imports are K5000 while the tax rate is 20% of income. Investment spending is
K1500, autonomous savings is negative (–) K2500 and the marginal propensity to save is 0.5.
a. Write down:
i. The import function for the economy
ii. The consumption function for the economy
b. What is the value of total autonomous expenditure?
c. What is the value of the multiplier for this economy?
i) When closed without government .
ii) When closed with government
iii) When the economy is open
d. What is the value of induced consumption expenditure at the equilibrium level of
income?
e. What is the value of the budget deficit or surplus at the equilibrium level of income?
f. What is the value of Net exports or trade balance at the equilibrium level of income?
g. Given that full employment is reached at a level of 14, 300, by how much should we
change investment so as to achieve full employment income?

Answer 1

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