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Assignment 1

# Assignment 1 - ECON 202 Tutorial Assignment 1 2010 To be...

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ECON 202: Tutorial Assignment 1, 2010 To be discussed in tutorials in the week beginning Monday 26 th July. This assignment will NOT be graded. You should prepare written answers and be prepared to answer questions and participate in discussion at the tutorial session. Question 1: The goods market. Consider the following model of the goods market for an economy: Y = Z (equilibrium condition) Z = C + I + G + X – IM (demand) C = (0.8) Y D (consumption function) I = 800 (investment demand) G = 1,000 (government spending) T = 1,000 (direct taxation) Y D = Y – T (definition of disposable income) X = 1,500 (export demand) IM = (0.3) Y (import demand) (a) Derive the demand for output, Z, as a function of output, Y. (b) Calculate the multiplier for this economy. (c) Calculate the equilibrium level of output for this economy. (d) At the equilibrium output, calculate the ratios, Y C , Y I , Y G , and Y X . (e)

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Assignment 1 - ECON 202 Tutorial Assignment 1 2010 To be...

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