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Question 3_ Assignment

The document presents a series of questions related to calculating the equilibrium level of income using given economic formulas and values. It asks for calculations regarding equilibrium income, changes in government expenditure, consumption levels, and the relationship between equilibrium and full employment income, as well as the nature of investment in a Keynesian model. Each question is assigned specific marks, indicating their importance in the overall assessment.

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zahraahendricks03
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2 views1 page

Question 3_ Assignment

The document presents a series of questions related to calculating the equilibrium level of income using given economic formulas and values. It asks for calculations regarding equilibrium income, changes in government expenditure, consumption levels, and the relationship between equilibrium and full employment income, as well as the nature of investment in a Keynesian model. Each question is assigned specific marks, indicating their importance in the overall assessment.

Uploaded by

zahraahendricks03
Copyright
© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Question 3 20 Marks

Use the information below to answer the questions that follow:

C = 600 + 0.75Y

I = 250

G = 350

(X – Z) = 40

T = 0.2Y

Yf = 3 200

3.1. Using the information provided, calculate the equilibrium level of income. Show all
calculations. In your answer, explain the significance of the multiplier and autonomous
expenditure in determining the equilibrium level of income

(9 Marks)

3.2 Calculate the change in government expenditure required to reach the full
employment level of income.

(3 Marks)

3.3 Calculate the equilibrium level of consumption.

(3 Marks)

3.4 Is the equilibrium level of income also the full employment level of income? Explain
your answer.

(3 Marks)

3.5 Why is investment regarded as autonomous in a Keynesian model?

(2 Marks)

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