Macroeconomics Answers

what happens to Keynesian model when tax rate increases?

fiscal policy includes....

how economy will reach to general equilibrium if goods market is in equilibrium but 
money market is not. 

Consider a Keynesian model: 

Full employment output = R100 million 

Tax rate = 0,25 

Investment = R40 million 

Autonomous consumption = R30 million 

Marginal propensity to consume = 0,8 

3.28 The value of the multiplier is … 

[1] 2 

[2] 1.67 

[3] 2.5 

[4] 4 

3.29 The equilibrium level of income is … 

[1] R70 million. 

[2] R175 million. 

[3] R280 million. 

[4] R140 million. 

3.30 To bring about full employment, government spending should be … 

[1] -R30 million. 

[2] -R72 million. 

[3] R30 million. 

[4] R75 million. 

Which of the following is correct about an increase in interest rate in the Keynesian model? 

[1] increase price levels 

[2] decrease price levels 

[3] increase investment 

[4] decrease investment 

Which one of the following is correct regarding contractionary fiscal policy in the Keynesian model? It will… 

[1] decrease inventories 

[2] increase inventories 

[3] increase investment 

[4] decrease investment 

calculating unemployment and inflation rate from okun's law and phillips curve equations