ECON
ECON203-LAB4-Q1

# ECON203-LAB4-Q1 - Lab 4(Question'I Name any bendayan Dare...

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Unformatted text preview: Lab 4 (Question 'I) Name‘ any bendayan Dare‘ 201302713 12214 Question 1 [11 points] Suppme the government raises its revenue by a net tax of 35 percent on income, t = 0.35. The marginal propensity to consume out of disposable inmme is 0.! and the marginal propensity to import is 0.2. Note: Keep as much precision as possible during yeurcalculations. Yourﬁnai answershould be aocumte to at least two decimal pieces. a] What is the slope oflhe AE function? What is the size of the multiplier? Slope ofAE = 0.32 Multiplier = 1.47 b] Autonomous expenditure by the household and business sectors (C + I] is 300, government expenditure is 400, earners are 100 and imports are 20. What is the autonomous expenditure and equilibrium output? What hi the governments budget balann? Autonomous Expenditure = 73!] Equilibrium le GDP = 1.141% Government Budget Baianoe = 1.47 c] The government increases its expenditures by 7D to provide additional funding for national defense. What is the effect on equilibrium income and output'il What is the effect on the net tax revenue? Equilbriumincome increases by 102.9 and lhene'ttaxrevenue increases tn,- 36.02 . d) What is the government‘s new budget balance? Government New Budget Balance = £2.51 Marking: Ii Slope of AE Your answer was: 0.32 Congramlationsi You have entered the conth enwer. Multiplier Your answer was: 1.47 Congratulationsi You have entered the correct answer. bi Autonomeua expendimre Your answer was: 780.00 Congramlationsi You have entered the conth enwer. ...
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