Q1. Deduce the aggregate saving and aggregate investment recognize in an open economy.
Q2. Assume that in a closed economy devoid of the government sector, the consumption function is given by C = 100 + 0.8 Y and the investment function is I = 50.
a) Determine the equilibrium level of income?
b) Find out the level of saving in equilibrium?
c) If ‘I’ were to increase to 100, then what would be the result on equilibrium income?
Q3. In a hypothetical economy domestic consumption expenditure (C) is provided by 3000 units, government expenditure (G) as 500, domestic investment (I) is 900, exports (X) as 100 and imports (M) as 60.
a) Find out the level of domestic savings (S).
b) Determine the size of the government budget deficit?
Q4. Find out the size of the total leakage in the economy? How is it influenced if there is a tax, T = 100 introduced in economy?