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1.Suppose that for a particular economy and period, investment was equal to RM 200 billion, government...

1.Suppose that for a particular economy and period, investment was equal to RM 200 billion, government expenditure was equals to 100, net taxes[TA] were fixed at 150 and consumption was represented by below function C= 20+0.6YD
a. What is the level of equilibrium income?
b. What is the value of government expenditure multiplier?
c. What is the value of the tax multiplier?
d. If investment decline by RM100 billion, what will be the new equilibrium

2.Assume investment = 100, government expenditure = 75 and net taxes fixed at 100. There was an autonomous fall in consumption and an increase in saving causes consumption function to shift from C= 25+ 0.8YD to C= 5 +0.8YD
a. Find the change in equilibrium income.
b. Analyse the impact on equilibrium real GDP due to the shift in consumption function utilising appropriate Keynesian diagram.
income?

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