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Given the features of Sunrise island, estimate the equation for consumption, net tax revenues, disposable income, and find out the simple multiplier.

The economy of Sunrise Island has the following features:

fixed price level
no foreign trade
autonomous desired investment (/) of $20 billion
autonomous government purchases (G) of $30 bil­lion
autonomous desired consumption (C] of S15 bil­lion
marginal propensity to consume out of disposable income of 0-75
net tax rate of 0.20 of national income

a. prepare an equation expressing consumption as a function of disposable income.

b. prepare down an equation expressing net tax incomes as a function of national income.

 

Business Economics, Economics

  • Category:- Business Economics
  • Reference No.:- M921989

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