Answer to Question #329760 in Macroeconomics for Kirti

Question

Suppose the consumption function is given by C-M +0. RR Y, while investment is given by

Investment (1)=2M, Government Expenditure (G) = 3M and Tax (T) = 0.2 Y. Where M = numeric

number of your roll number and RR = Last two digit of your roll number. For example if your roll

no is BCP21987 then your M-21987 and RR=0.87

a. Write Consumption Function and Saving Function for you?

b. What is the equilibrium level of income in this case? c. What is the level of saving in equilibrium?

d. If Investment (1) rises to 200 what will the effect be on the equilibrium income? e. Find the value of the multiplier here?

Answer 1

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