Complete the following table and answer the questions below. The following data
ID: 1220145 • Letter: C
Question
Complete the following table and answer the questions below. The following data refers to a national economy with all figure in $billions. The MPC, MTR, MPM and the three injections are all constant. What is the value of equilibrium income? What are the values of the total injections and total leakages at equilibrium? Total Injections:__Total Leakages:__What is the value of the multiplier?___Suppose that exports from this economy were to increase by $100, what is the value of the new equilibrium income?___What is the algebraic expression for the Tax function?___What is the algebraic expression for the Import function?__What is the algebraic expression for the AE function?__Explanation / Answer
The table is completed below:
The following formulas have been used for completing the above table:
Yd = Y-T
S = Yd-C
AE = C+I+G+Xn
a) AT Equilibrium income, Y = AE. Thus 500 is equilibrium income.
b) Total Injection = Total leakages = 270
c) Multiplier = 1/MPC = 1/0.5 = 2.
d) If exports increases by 100, the following changes will take place:
e) Algebraic expression for tax function = change in T / Change in AE = 0.19
Y T Yd C S I G X IM Xn AE 0 25 -25 30 -25-30= -05 80 100 90 50 40 250 100 50 50 90 -40 80 100 90 60 30 380 200 75 125 150 -25 80 100 90 70 20 350 300 100 200 210 -10 80 100 90 80 10 480 400 125 275 270 5 80 100 90 90 0 450 500 150 350 330 20 80 100 90 100 -10 500 600 175 425 390 35 80 100 90 110 -20 550