00:01
You are given the following data in billions of dollars or in countries economic.
00:05
You are given the investment to be 150.
00:08
You are given the government spending to be 130.
00:11
Exports are 70.
00:12
Imports are 60.
00:15
Alternatives consumption is 100.
00:17
Marginal propensity to save is 0 .25.
00:22
Now, we are to compute the assumption and saving functions for this economy and indicate the use.
00:28
We are to compute the equilibrium level of income, the equilibrium level of consumption and saving, the multiplier and also the question says that you are given that the full employment level of national income is 735 billion.
00:44
Would this economy be experiencing deflationary of inflationary gap and what's the magnitude of the gap and what could the government do to remove it? also, the government decided to increase the spending by 60 billion.
00:57
We are to compute the equilibrium level of income and explain why income has not changed from the original level.
01:06
So, starting from the first question, when the marginal propensity to save is 0 .25, then the marginal propensity to consume will be equal to 1 minus nps which is 0 .75.
01:24
So, consumption then will be the autonomous consumption plus nps times y where y is the income level.
01:32
So, this is c will be equal to 100 plus 0 .75 y and saving is y minus c.
01:41
Saving will be y minus 100 minus 0 .75 y.
01:46
So, s will be minus 100 plus 0 .25 y...