Answer to Question #94439 in Macroeconomics for Nomthandazo

Question

autonomous consumption C=R300
autonomous investment I= R200
government expenditure G=R600
autonomous net eports X-Z= -R100

marginla propensity to save =1/7
tax rate t=1/8
full employment level =R6000

the equilibrium level of income is
(1) R 1000
(2) R 3000
(3) R 2000
(4) R 4000

autonomous aggregate expenditure is
(1) R 1100
(2) R 1000
(3) R 500
(4) R -R100

the value of the multiplier is
(1) 7
(2) 8
(3) 4
(4) 2

the marginal propensity to consume is
(1) 1/7
(2) 6/7
(3) 0.14
(4) 0.5

to reach full employment, government expenditure should increase by
(1) R 2000
(2) R 3000
(3) R 1100
(4) R 500

Answer 1

the equilibrium level of income is

(4) R 4000

autonomous aggregate expenditure is

(3) R 500

the value of the multiplier is

(1) 7

the marginal propensity to consume is

(2) 6/7

to reach full employment, government expenditure should increase by

(4) R 500