MATHEMATICAL ECONOMICS ASSIGNMENT 1.doc - SCHOOL OF...

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SCHOOL OF ECONOMICS, FINANCE AND BANKINGUUM COLLAGE OF BUSINESS (COB)SEMESTER 2 SESSION 2017/2018 (A172)BEEQ 2013 GROUP AMATHEMATICAL ECONOMICSGROUP ASSIGNMENT 1GROUP: 13STUDENT’S NAME: 1. LIM JIA HUI (254622)2. CHOY SHIAU JING (252993)DATE OF SUBMISSION : 29 MARCH 2018SUBMITTED TO: MOHD. FAISOL BIN MD SALLEH1
TABLE OF CONTENTS NO TOPIC PAGES 1.0Static (Equilibrium Analysis)12.0Applications of Matrix Algebra in Economics 63.0Comparative Statics Analysis 11TOPIC 1: STATIC (EQUILIBRIUM ANALYSIS) 2
A161QUESTION 2Given a national income model as follows:Y = C + I0+ G0C = C0+ bYdT = T0+ tY,Where Y = income; Yd= disposable income; C = consumption; C0 = autonomous consumption; I0autonomous investment; G0= autonomous government expenditure; T = tax; T0 = autonomous tax; band t are the coefficients.a)Solve the model for the equilibrium national income (Y*)(3 marks)b) Using a), determine the government expenditure multiplier and explain its meaning.(3 marks)=
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c) Now, given the following information that b = 0.65; t = 0.25; C0= 150; I0= 200; G0= 350;and T0= 180, calculate the equilibrium level of national income (Y*), consumption (C*), andtaxation (T*).(3 marks)d) Determine the effect on the equilibrium level of income of an increase of 50 units in autonomous tax (T0).

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