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Keynesian Economic Theory TD

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19 views2 pages

Keynesian Economic Theory TD

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bachirzeggai064
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Naama University Center Institute of Economics And Management Sciences

Module: Macroeconomics Directed Work Series

Exercise 01:
Suppose you have the values of an hypothetical economy as following:
Y= 0-1000-2000-3000-6000-10000.
C= 500-1250-2000-2750-5000-8000.
1- Calculate the values of saving for each year
2- put the values of MPC, MPS in the table for each year
3- put the values of APC and the table for each year
4- Find the consumption function
5- Find the saving function.
Example 02 :
Suppose the consumption function : C = 100+ 0.7 Y. find the saving function.
Exercice N 03 :
Given the empirical consumption function C= 200+0.8Y and I = 1500, calculate equilibrium
level of national income. What would be the consumption expenditure at equilibrium level
national income?
Example 04 :
The consumption function is expressed as: C = 100 + 0.25 Y (where C = consumption
expenditure and Y = National Income). Calculate saving if consumption expenditure at
equilibrium level of national income is. 500.
Example 05 :
Given, the consumption function, C = 150 + 0.6Y, where C = consumption expenditure, Y =
income and investment expenditure = Rs 2,000. Calculate:
(i) Equilibrium level of national income
(ii) Consumption at equilibrium level of national income
(iii) Saving at equilibrium level of national income
Example 06 :
The consumption function for an economy is given as: C = 200 + 0.8Y. (i) Determine the value of
MPC and MPS; (ii) Autnomous Consumption; (iii) Derive the corresponding saving function; (iv)
Calculate consumption at the income levels of Rs. 3,000 and Rs. 5,000 . (v) Determine the break-
even level of income.
Example 07 :
I=100/Y= 600/ C0= 50
Find the consumption and savine functions, and their values at the equilibrium.
Example 08 :
Given the empirical consumption function C= 200+0.8Y and I = 1500, calculate equilibrium
level of national income. After you find saving function, What would be the equilibrium level or
national income Using the injection and leakage method?
Example N 0 9:
Given the empirical consumption function C= 500+0.9Y and I = 2000, calculate equilibrium
level of national income. What would be the equilibrium level of national income, and the
multiplier? If the investment increase by 10 . What would be the new national income?
1
Naama University Center Institute of Economics And Management Sciences
Module: Macroeconomics Directed Work Series

Example 10:
C=50+0.75Y, I=230, G=300, T=100, Yf=3000. What is the equilibrium level of incom Y.

Example 11 :
C = 50 + 0.8YD
I = 70
G = 200
TR = 200 (i.e. Transfer Payments)
t = 0.20
(a) Calculate the value of multiplier and equilibrium level of GDP.
(b) Calculate the Budget Surplus.
(c) Suppose that tax rate increases from 20% to 25%, what is the new equilibrium
income? What is the new multiplier? Also calculate the change in budget surplus.
(d) Would you expect the change in the surplus to be more or less if the value of MPC
had been 0.9 rather than 0.8?

Example 12:
Assume the consumption function is C = 200 + 0.75(Y - T), I = 100; G = 100; T =100+ O.2 Y.
What is the equilibrium level of Y?
Find the saving function and calculate equilibrium level of Y using injections leakages methed.
compute the budget balancc (T-G) If G increases to 125, what is the new equilibrium Y?
compute the new budget balance (T-G) . What level of G is necessary to reach 1600 for Y?
Example 13:
(a) Suppose Autonomous consumtion C0 = 60, MPC = 0.8, t = 0.25, G = 80, TR = 50, I = 150, X
= 50 and M = 80. Calculate equilibrium incom Y.
(b) Calculate the change in equilibrium income Y resulting from each of the following:
(i) Autonomous consumption C0 rises by 30;
(ii) I falls by 50 while NX rises by 40;
(iii) TR rises by 60.

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