ECON105week3questions - autonomous investment is $10 and...

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QUESTION 1 Imagine a full economy where consumers want to consume at least $30 plus 0.9 of their disposable income. Also, investment is $30, government spending is $10, and exports are $20. Finally, the marginal propensity to tax (t) is 1/3, and the marginal propensity to import (m) is 0.2. (a) Find and graph the equilibrium income in this economy, using an AE/Y graph. (b) If exports rise by $15, what will be the new equilibrium income? QUESTION 2 Imagine an economy with no government, such that autonomous consumption is $65,
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Unformatted text preview: autonomous investment is $10, and autonomous exports are $25. Also, the marginal propensity to consume is 95%, and the marginal propensity to import is 5%. (a) Find the equilibrium income. (b) What new marginal propensity to spend will decrease the equilibrium income by $100? QUESTION 3 Using the equilibrium relationship NS = NAF, derive the equilibrium relationship LEAKAGES = INJECTIONS, and also AE = Y. ECON105 week 3 questions Eldar Sehic SFU 2010-1...
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