ECS2602 ASSIGNMENT 03 SOLUTIONS, 2021

University of South Africa

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ECS2602 ASSIGNMENT 03 SOLUTIONS, 2021 (YEAR MODULE)

ECS2602 ASSIGNMENT 03 SOLUTIONS, 2021 (YEAR MODULE)
Other • 47 pages • 2021

QUESTION 1 a) Multiplier Formula Multiplier = 1 (1−0.8) = 5 b) = 100 + 50 + 40 - 0.8(20) = 174 c) equilibrium ie AE = Y DI = Y – T; AE = C + I + G + (X - M) C = a + b(Y – T) C = consumption spending, DI = disposable income, I = investment expenditure, G = government spending, T = tax revenue, X = exports, M = imports, Y = real GDP, b = Mpc, a = autonomous consumption AE = 100 + 0.8(Y -20) + 50 + 40 AE = 100 + o.8Y – 16 + 90 AE =174 + 0.8Y Since AE = Y therefore Y =174 +0.8...