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Multiplayer Calculations in Macroeconomics

The document presents a problem set focused on calculating national income and multipliers in a hypothetical economy with various macroeconomic conditions. It includes multiple scenarios with different consumption functions, investment, government expenditure, and tax rates, requiring the calculation of equilibrium income and multipliers. Additionally, it addresses the impact of government expenditure on achieving full employment income levels.

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Bhaskar Saha
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10 views1 page

Multiplayer Calculations in Macroeconomics

The document presents a problem set focused on calculating national income and multipliers in a hypothetical economy with various macroeconomic conditions. It includes multiple scenarios with different consumption functions, investment, government expenditure, and tax rates, requiring the calculation of equilibrium income and multipliers. Additionally, it addresses the impact of government expenditure on achieving full employment income levels.

Uploaded by

Bhaskar Saha
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

Problem set 1

Numerical on Multiplier (3 sector)


1) The following data characteristics the macroeconomic conditions of a hypothetical economy
C=50+0.8 Yd
I=100
G=T=75
a) Calculate national income of the economy. b) What is the value of multiplier?

2) Suppose the structural model of the economy is given by:


C=100+0.75 Yd
I=200
G=T=100
TR=50
a) Find the equilibrium level of national income of the economy.
b) Calculate Transfer payment multiplier and GEM.
If the full employment level of income is 1600 crores how much Government expenditure
should be increased?

3) Let the model of the economy is given by:


C=50+0.8 Yd
I=70
G=200
TR=100
Rate of Income tax (T)=.2Y
a) Find the equilibrium level of national income of the economy.
b) What is the multiplier with tax and without tax.

4 sector multipliers
4) Suppose the structural model of the economy is given by:
C=100+0.8 (Y-50 -tY)
I=50
G=50
t=.25
X=10
M=5+.1Y
a) Find the equilibrium level of national income of the economy.
b) Find foreign trade multiplier?

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