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# help with econ question. watch

1. An economy is currently in equilibrium. The following figures, in billions, refer to elements in its national income accounts:

Consumption (total): £25
Investment: £5
Government expenditure: £5
Imports: £5
Exports: £10

A)Current equilibirum level of national income?
b)Level of injections
c)level of withdrawls
D)Assume the level of saving is £5 billion. What is the level of tax revenue?
e) If national income now rises to £60billion and, as a result, the consumption of domestically produced goods rises to £30 billion, what is the marginal propensity to save?
F)f) What is the value of the multiplier?
2. a) so Y(national income)= C + I + G +(N-X)

=25 + 5 +5 + (10-5)
=40 billion pounds

b)injections= investment, gov spending, exports= 20 billion pounds

c)withdrawals= imports, tax, savings ( you only show imports so I'm assuming) 5 billion pounds

NB net injection is injections-withdrawals= 15 billion pounds

d) unsure, i don't think i understand this one

e) so income rises by 20 billion, and consumption by 5 billion, so mpc (consume) = 5/20=0.25

thus mps (save) = 1-0.25= 0.75

f) multiplier = 1/1-c (c being mpc)
= 1/0.75
= 1.333 (4/3)

hope this helps, give some rep if you think it did!

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Updated: January 14, 2015
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