Assign10 - Economics 100 Assignment#10 National Income and...

Info iconThis preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
Economics 100 Assignment #10 National Income and The Multiplier 1. In a particular economy, the following relationships hold (all amounts are in $billions): C = 25 + 0.6YD T = 10 + 0.15Y I = 30 G = 40 X = 15 M = 0.01Y The price level is fixed. (a) What is the equilibrium level of national income? Show your calculation. (b) If the level of national income were below the equilibrium level, would actual inventory investment equal desired inventory investment? How would firms respond? Explain your answer. (c) To combat a recession, the Government decides either to increase expenditures by $2 billion or to reduce taxes by $2 billion. Which policy will have the larger impact on autonomous expenditure? On national income? Explain your answer. (note: a numerical answer is not an explanation). 2. (Refer to question # 1) As a result of a boom in the United States, exports increase from 15 to 25. a) How will the equilibrium level of national income change? Relate your answer to the slope of the AE schedule.
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
b) Explain
Background image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 2

Assign10 - Economics 100 Assignment#10 National Income and...

This preview shows document pages 1 - 2. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online