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.

Open in App

Solution

Given, C = 40 + 0.8 YD

T = 50

l = 60

G = 40

X = 100

M = 50 + 0.05Y

Equilibrium income = $\frac{C - cT + I + G + X - M}{1 - c + m}$

= $\frac{40 + 0.8 \times 50 + 40 + 60 + 100 - 50}{1 - 0.8 + 0.05}$

= $\frac{40 - 40 + 100 + 100 - 50}{0.25}$

= $\frac{150}{25} \times 100 = 600$

NX = X - M - mY

Net export balance:

NX = X - M - 0.05Y

= 100 - 50 - 0.05 $\times$ 600

= 50 - 30 = 20

Suggest Corrections

Similar questions

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?

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

(a) Find equilibrium income

(b) Find the net export balance at equilibrium income

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

Q. Calculate (a) National Income, and (b) Net National Disposable Income. (Rs in crores)
(i) Compensation of employees 2,000
(ii) Rent 400
(iii) Profit 900
(iv) Dividend 100
(v) Interest 500
(vi) Mixed income of self-employed 7,000
(vii)Net factor income to abrorad 50
(viii)Net exports 60
(ix) Net indirect taxes 300
(x) Depreciation 150
(xi) Net current transfers to abroad 30

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?

Join BYJU'S Learning Program

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.

Given, C = 40 + 0.8 YD T = 50 l = 60 G = 40 X = 100 M = 50 + 0.05Y Equilibrium income = C - cT + I + G + X - M1 - c + m =40+0.8×50+40+60+100−501−0.8+0.05 = 40−40+100+100−500.25 = 15025×100=600 NX = X - M - mY Net export balance: NX = X - M - 0.05Y = 100 - 50 - 0.05 × 600 = 50 - 30 = 20

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.