Question 1consider a closed economy with no government, Ask an Expert

Economics

Question 1:

Consider a closed economy with no government sector in which consumption (C) is related to income (Y) by the equation:

C = A + bY

(a) What is the marginal propensity to consume?

(b) How is the level of savings related to income in the economy?

(d) What would be the equilibrium level of income?

(e) Investment in this model is assumed to be autonomous. If investment was assumed to be induced, what main factor will determine its level?

(f) Clearly draw and explain the circular flow when the government sector is introduced in the model.

Question 2:

Write notes on ALL of the following:

(a) Functions of the Bank of Mauritius
(b) International Competitiveness
(c) Budget Deficit and Fiscal Stance

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Macroeconomics, Economics

Category:- Macroeconomics
Reference No.:- M9589481

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