# PSu ECON 104 HW 6.docx - Score for this quiz 100 out of 100...

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Score for this quiz: 100out of 100Submitted Jul 21 at 8:17amThis attempt took 55 minutes.Part 1: Multiple choice questions:Questions 1-8 are worth 3 points each. Questions 9-12 are worth 4 points each.Question 13 / 3 ptsConsider the following modeli) C = 1500 + mpc (Y - tY)ii) I = 800iii) G = 500iv) X - M = 500 - mpi (Y)where:t = the (flat) tax ratempc = the marginal propensity to consumempi = the marginal propensity to importsuppose mpc = .80, t = .25, mpi = .2Given the information above, solve for the equilibrium output:Y* = 3300Y* = 1800Y* = 1500Y* = 5500Y = C + I + G + X-MY = 1500 + mpc(1-t)Y + 800 + 500 + 500 - mpi YY - mpc(1-t)Y + mpiY = 3300Y [ 1 - mpc(1-t) + mpi ] = 3300Y = 1 / [1 - mpc(1-t) + mpi] X 3300Y = 1 / [1 - .8(1-.25) + .2] X 3300Y = 1.66667 X 3300 Y = 5500 Question 23 / 3 pts
Question 33 / 3 ptsWhen we discussed the multiplier we discussed the impact effect. For example, suppose that G increases by 100 to 600 and we assume, as we often do, that firms match the increase in demand by increasing Y by 100. In round two, this is an increase in income of 100 to consumers. We will trace out exactly where this 100 increase in income goes in the second round. Recall, there are three leakages to address (via taxes, imports and savings).Given that t=.25, we know that .25 of every dollar increase in gross income is a leakage due to taxes. Since the increase in income is \$100, we know the leakage due to taxes is:
Question 43 / 3 ptsGiven that mpi=.2, we know that .2 of every dollar increase in gross income is a leakage due to imports. Since the increase in income is \$100, we know the leakage due to imports is: