Calculate the income level if consumption is equal to 1000 crore and the consumption function isC=750+0.5Y
Answers
Explanation:
Calculate consumption level for Y = र 1000 crores if function is C = 300 + 0.5Y.
1. Short-run According to JM Keynes, ‘A period of time during which level of output is determined exclusively by the level of employment in the economy, is termed as short-run.’
= 200 + 0.75Yd; C = consumption function; Yd = disposable income (Y-T)
T = 200; T = Tax revenue
I = 200; I = Investment
G = 300; G = Government expenditure
Yf = Full Employment RGDP (Potential RGDP) = 3,000
1. Estimate the equilibrium GDP level (income).
2. At the equilibrium level of output you estimated for Q1 above, estimate the aggregate consumption level
3. At the equilibrium level of output you estimated for Q1 above, estimate the aggregate saving level.
4. The MPC and MPS for the economy is respectively:
5. The expenditure multiplier for the economy is:
6. The tax multiplier for the economy is:
7. If the Tax amount is reduced from $200 to $100, estimate the equilibrium GDP level (income).
8. With Tax amount keeping at $200, if Government spending (G) is increased from previous level of $300 to $400, estimate the equilibrium level of GDP.
9. With Government spending keeping at $300, if the tax amount is increased from $200 to $300, estimate the equilibrium level of GDP.
10. With Tax amount keeping at $200, if government spending is reduced from $300 to $200, estimate the equilibrium level of GDP.
11. Using the data for potential RGDP in the abov