Q. An economy has the following consumption function: C=200+0.8DI

The government budget is balanced, with government purchases and taxes both fixed at $1,000. Net exports are$100. Investment is $600. Find equilibrium GDP. What is the multiplier for this economy? If G rises by $100, what happens to Y? Illustrate what happens to Y if both G and T rise by $100 at the same time?

Q. Find out the equilibrium level of GDP demanded in an economy in which investment is $250, net exports are zero, government purchases also taxes are both $400, and the consumption function is as follows:
C=250+0.5DI

Q. "Suppose that Canada produces 1.0 million bicycles a year and imports another 4.0 million; there is no tariff or other import barriers. Bicycles sell for $400 each. Parliament is considering a $40 tariff on bicycles. What is the maximum net national loss that this could cause Canada? Illustrate what is the minimum national loss if Canada is a small country that can not affect the world price?