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  • Macro Economics: Student Name: Student ID: F2018054047

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    Zeeshan Khursheed
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    The document contains the answers to a quiz on macroeconomics. It includes calculations to determine: 1) Equilibrium income (Y) given consumption (C), investment (I), government spending (G), exports (X) and imports (M). 2) Consumption (C) given disposable income (Yd). 3) Saving (Se) given equilibrium income (Ye) and consumption (Ce). 4) The marginal propensity to consume (MPC), marginal propensity to save (MPS), and government spending multiplier (k). 5) The new equilibrium income (Y1) given an increase in government spending (G) of 100.

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    MACRO ECONOMICS (2)

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    The document contains the answers to a quiz on macroeconomics. It includes calculations to determine: 1) Equilibrium income (Y) given consumption (C), investment (I), government spending (G), exports (X) and imports (M). 2) Consumption (C) given disposable income (Yd). 3) Saving (Se) given equilibrium income (Ye) and consumption (Ce). 4) The marginal propensity to consume (MPC), marginal propensity to save (MPS), and government spending multiplier (k). 5) The new equilibrium income (Y1) given an increase in government spending (G) of 100.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    3 views3 pages

    Macro Economics: Student Name: Student ID: F2018054047

    Uploaded by

    Zeeshan Khursheed
    The document contains the answers to a quiz on macroeconomics. It includes calculations to determine: 1) Equilibrium income (Y) given consumption (C), investment (I), government spending (G), exports (X) and imports (M). 2) Consumption (C) given disposable income (Yd). 3) Saving (Se) given equilibrium income (Ye) and consumption (Ce). 4) The marginal propensity to consume (MPC), marginal propensity to save (MPS), and government spending multiplier (k). 5) The new equilibrium income (Y1) given an increase in government spending (G) of 100.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
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    of 3

    MACRO ECONOMICS

    Resource Person: Prof. Dr. Hafeez Ur Rehman

    Section: A

    “Quiz # 4”

    Student Name: M. Zeeshan Khursheed

    Student ID: F2018054047


    Answer # 1

    Y=C+I+G+(X-M)

    Y=1500 + 0.8 Yd + 300 + 500 + 200

    Y=2500 + 0.8 (Y-T)

    Y=2500 + 0.8 (Y-400)

    Y=2500 + 0.8Y-320

    Y-0.8Y=2500-320

    0.2Y=2180

    Y=2180/0.2

    Y=10,900

    Answer # 2

    C=1500 + 0.8 Yd

    C=1500 + 0.8 (Y-T)

    C=1500 + 0.8 (10900-400)

    C=9,900

    Answer # 3

    Se=Ye – Ce

    Se =10,900-9,900

    Se = 1000

    Answer # 4

    C=1500 + 0.8 Yd

    MPC=0.8

    MPS=1-MPC
    MPS=1-0.8

    MPS=0.2

    k= change in Y/change in G = 1/1-MPC

    k= 1/1-0.8=1/0.2

    k= 5

    The value of Govt. spending multiplier is 5.

    Tax Multiplier

    Change in Y/ Change in T= -MPC/1-MPC

    = -0.8/1-0.8

    = -0.8/0.2

    = -4

    Answer # 5

    k= change in Y/ change in G = 1/1-MPC

    change in Y/ change in G= 5

    Where change in G= 100

    Change in Y/100=5

    Change in Y=100*5= 500

    Since Ye =10,900

    Y1 = Ye + change in Y

    Y1 = 10900 + 500

    Y1 = 11400 ( New Equilibrium Income)

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