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Mathematics & Economics
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Keynesian Economics: The Income-Expenditure Model

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This assignment can be found in Google Docs: Macroeconomics Assignment: Problem Set — The Income-Expenditure Model
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The Income-Expenditure Problem Set

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Keynesian Economics
Author
Affiliation
Course
Instructor
Due Date
Income–Expenditure Model
1. Consider the following information in the table below.
Income (Y)

Consumption (C)

Savings (S)

1000

950

50

1100

1040

60

1200

1130

70

1300

1220

80

Given this data the consumption function can be written as:
Y = 1.11C- 55.6
2. Consider the following information for Slovenia.
Category

Amount

Autonomous Consumption

250

MPC

0.9

Tax Rate

0.25

Investment

800

Government Expenditure

100

Exports

20

MPI

0.05

What is the equilibrium level of GDP in the income-expenditure model?
AE = Y
Y = C + I+G +X –M; therefore,
Y = 250 + 0.9 (0.75Y) +100+ 800 + 20 – 0.05Y
Y = 1170 + 0.625 Y
0.325Y = 1170
Y = 3,600
AE = 3,600 (equilibrium level of GDP)
3. Consider the following information in the table below.
Income (Y)

Imports (M)

1000

200

1100

220

1200

240

1300

260

Given this data, what is Marginal Propensity to Import (MPI)?
SUMMARY OUTPUT

















Regression Statistics








Multiple R

1








R Square

1








Adjusted R Square

1








Standard Error

0








Observations

4



...
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