You are given the following information about a closed economy with no government: Consumption = 115 + 0.6Y Investment = 550 Use the above information to answer the questions that follow: Q.4.1 Calculate the value of autonomous spending. (3) Q.4.2 Calculate the value of the multiplier. (3) Q.4.3 Calculate the equilibrium level of income. (3)

Economics For Today

10th Edition

ISBN:9781337613040

Author:Tucker

Publisher:Tucker

Chapter19: The Keynesian Model In Action

Section: Chapter Questions

Problem 5SQP

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Question

You are given the following information about a closed economy with no government:
Consumption = 115 + 0.6Y
Investment = 550
Use the above information to answer the questions that follow:
Q.4.1 Calculate the value of autonomous spending. (3)
Q.4.2 Calculate the value of the multiplier. (3)
Q.4.3 Calculate the equilibrium level of income. (3)
Q.4.4 Is the equilibrium level of income also the full employment level of income? Explain
your answer.
(3)
Q.4.5 Identify any three non‐income determinants of consumption. (3)

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