(a) Derive investment multiplier. (b) Let structural equation of Nepalese economy were: C = 200 + 0.7Yd ( Yd = Y-T), T= 500 + 0.20Y, I = Rs 200…
BBA Macro Economics · 2024 · Solved Question with Answer
(a) Derive investment multiplier.
(b) Let structural equation of Nepalese economy were: C = 200 + 0.7Yd ( Yd = Y-T), T= 500 + 0.20Y, I = Rs 200 million, G = Rs 400 million, X = Rs 100 million, M = 50 + 0.1Y.
(i) Compute equilibrium level of income.
(ii) What will be the effect on equilibrium income when government expenditure increase by Rs 20 million and tax rate level by 10 percent?