Question

4. Suppose that the following equations describe the economy of the country of the Philippines. C= 500 + 0.8 (Y – T), I= 200, G= 300, NX= 50, T= 200, Yf= 5000; where C=consumption level, I=investment, G=government expenditures, NX=net exports, T=taxes and Yf=full employment output/income. Use this information to find each of the following: 4.1. Investment, government and tax multiplier. 4.2. Equilibrium output/income. 4.3. The output gap. 4.4. By how much would government expenditures have to change to eliminate the output gap? 5. Suppose that the following equations describe the 4-sector economy Consumption function C= 60 + 0.8 Yd, Investment function I= 100-5i, % interest rate i=6 (use 6 to compute for the investment), Government Expenditure G= 76, Lump sum Tax Tx= 15, Transfer payments TR=60, Exports X=70 Imports M=20+0.2Y 5.1. Calculate the equilibrium level of income. At this level of income, is the economy operating with a budget surplus or budget deficit? 5.2. Calculate the investment, government, tax, transfer payments and foreign trade multiplier. 5.3. Suppose that government increases its education and health services by 65, what is the new level of income? 5.4. If exports increase by 10, what is the new level of income? Is the economy operating with a trade deficit or surplus at this level of income?

          4. Suppose that the following equations describe the economy of the country of the
Philippines.
C= 500 + 0.8 (Y – T), I= 200, G= 300, NX= 50, T= 200, Yf= 5000; where C=consumption
level, I=investment, G=government expenditures, NX=net exports, T=taxes and Yf=full
employment output/income.
Use this information to find each of the following:
4.1. Investment, government and tax multiplier.
4.2. Equilibrium output/income.
4.3. The output gap.
4.4. By how much would government expenditures have to change to eliminate the
output gap?
5. Suppose that the following equations describe the 4-sector economy
Consumption function C= 60 + 0.8 Yd,
Investment function I= 100-5i,
% interest rate i=6 (use 6 to compute for the investment),
Government Expenditure G= 76,
Lump sum Tax Tx= 15,
Transfer payments TR=60,
Exports X=70
Imports M=20+0.2Y
5.1. Calculate the equilibrium level of income. At this level of income, is the economy
operating with a budget surplus or budget deficit?
5.2. Calculate the investment, government, tax, transfer payments and foreign trade
multiplier.
5.3. Suppose that government increases its education and health services by 65, what is
the new level of income?
5.4. If exports increase by 10, what is the new level of income? Is the economy
operating with a trade deficit or surplus at this level of income?

4. Suppose that the following equations describe the economy of the country of the
Philippines.
C= 500 + 0.8 (Y – T), I= 200, G= 300, NX= 50, T= 200, Yf= 5000; where C=consumption
level, I=investment, G=government expenditures, NX=net exports, T=taxes and Yf=full
employment output/income.
Use this information to find each of the following:
4.1. Investment, government and tax multiplier.
4.2. Equilibrium output/income.
4.3. The output gap.
4.4. By how much would government expenditures have to change to eliminate the
output gap?
5. Suppose that the following equations describe the 4-sector economy
Consumption function C= 60 + 0.8 Yd,
Investment function I= 100-5i,
% interest rate i=6 (use 6 to compute for the investment),
Government Expenditure G= 76,
Lump sum Tax Tx= 15,
Transfer payments TR=60,
Exports X=70
Imports M=20+0.2Y
5.1. Calculate the equilibrium level of income. At this level of income, is the economy
operating with a budget surplus or budget deficit?
5.2. Calculate the investment, government, tax, transfer payments and foreign trade
multiplier.
5.3. Suppose that government increases its education and health services by 65, what is
the new level of income?
5.4. If exports increase by 10, what is the new level of income? Is the economy
operating with a trade deficit or surplus at this level of income?

Added by Christine C.

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