Ex Ante Investment

Q.

Suppose C = 40 + 0.8YD, T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y

(i) Find equilibrium income.

(ii) Find the net export balance at equilibrium income.

(iii) What happens to equilibrium income and the net export balance when the government purchases increases from 40 to 50?

Q.

We suppose that C = 70 + 0.70Y D, I = 90, G = 100, T = 0.10Y (a) Find the equilibrium income. (b) What are tax revenues at equilibrium Income? Does the government have a balanced budget?

Q.

Find equilibrium Y when C = 100 + 0.5Y and I = 1, 000.

1. 2, 200

2. 4, 500

3. 2, 000

4. 733.33

Q.

We suppose that:

C = 70 + 0.70YD, I = 90, G = 100, T = 0.10Y

(i) Find the equilibrium income.

(ii) What are the tax revenues at equilibrium income? Does the government have a balanced budget?

Q.

Consider an economy described by the following functions: C = 20 + 0.80Y, I = 30, G = 50, TR = 100 (a) Find the equilibrium level of income and the autonomous expenditure multiplier in the model. (b) If government expenditure increases by 30, what is the impact on equilibrium income? (c) If a lump-sum tax of 30 is added to pay for the increase in government purchases, how will equilibrium income change?

Q. The equilibrium level of income is defined where .

1. AS > AD
2. AD > AS
3. AS = AD
4. AS >/= AD

Q. When C = 100 + 0.5Y and I = 1, 000, equilibrium Y = .

1. 2, 200
2. 4, 500
3. 2, 000
4. 733.33

Q. If elasticity of demand $=\infty$, equilibrium price remain unchanged, no matter supply increases or decreases. Comment.

Q.

Find equilibrium Y when: $\text{C}=100+0.5\text{Y}$ and $\text{I}=1,000$

Q.

Suppose C = 40 + 0.8YD, T = 50, I = 60, G = 40, X = 90, M = 50 + 0.05Y.

In the above example, if exports change to X = 100, find the change in equilibrium income and the net exports balance.

Q. In the developed economy, not only total income but also ___________ is very high.

1. Gross Domestic Product
2. National income
3. Per capita real income
4. all of the above

Q. When total demand for a commodity whose price has fallen increases, it is due to.

1. Income effect
2. Substitution effect
3. Complementary effect
4. Price effect

Q. Equilibrium price is the price when ________.

1. supply is less than demand
2. demand is very high
3. supply is greater than demand
4. supply is equal to demand

Q. Explain national income determination through the two alternative approaches. Use diagram.

Q.

The equilibrium level of income is defined where

1. AS > AD

2. AD > AS

3. AS = AD

4. Cannot be determined

Q. If the supply of bottled water decreases, the equilibrium price ___________ and the equilibrium quantity ___________.

1. Increases; decreases
2. Decreases; increases
3. Decreases; decreases
4. Increases; increases

Q. What are the two approaches for determining the equilibrium level of income?

Q. The equilibrium below full employment level is termed as _____________.

1. aggregate disequilibrium
2. over employment equilibrium
3. underemployment equilibrium
4. none of the above

Q. Equilibrium level of income is determined at a level where ________________________.

1. planned investment equals planned saving
2. price equals demand
3. demand equals supply
4. income equals saving

Q. When $MR{S}_{XY}<\frac{P_X}{P_Y}$, the consumer reaches the point of equilibrium only when the consumption of $X$ increases and of $Y$ decreases.

1. True
2. False