2019 ECO152 Tut 6 Homework exercise Student version.docx

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2019 ECO152: MACROECONOMICS TUTORIAL HOMEWORK EXERCISE 6 WEEK 10 (Monday-Thurday, 15 – 18 April and Friday, 26 April) Surname Ini: ………………………..…………………. Student no:………………………. Marks… .... …/15 Question 1 [2] 1.1. How does the introduction of (a) taxes and (b) imports affect the size of the multiplier? Why is this the case? (2) ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… ………………………………………………………………………………………………………… Question 2 [13] Use the information in the box below to answer the following questions: Consider a Keynesian model where: full employment output = R80 million exports = R5 million the marginal propensity to import = 0.15 autonomous imports = R15 million government spending = R15 million the tax rate = 0.20 investment = R20 million autonomous consumption = R25 million the marginal propensity to consume = 0.7

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2.1. Derive the consumption function (2)

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