Neco 2023 Economics Question 25

Practice objective / multiple choice question 25 from the 2023 Neco Economics examination.

Neco 2023 Economics Objective / Multiple Choice Medium Difficulty
Question 25 NECO • 2023 • ECONOMICS • objective

In an economy the consumption function is \(C = 200 + 0.75(Y - T)\), investment is \(I = 150\), government spending is \(G = 250\), and taxes are proportional: \(T = 0.2Y\). Net exports are zero. (i) Compute the equilibrium national income \(Y\). (ii) Calculate the fiscal multiplier. (iii) If government spending rises by ₦100, what is the new equilibrium income? Give all answers rounded to the nearest naira.

Answer Options

A. Equilibrium income Y = ₦1,400; multiplier = 2.0; new equilibrium income = ₦1,600
B. Equilibrium income Y = ₦1,500; multiplier = 2.0; new equilibrium income = ₦1,700
C. Equilibrium income Y = ₦1,600; multiplier = 2.5; new equilibrium income = ₦1,850
Correct Answer D. Equilibrium income Y = ₦1,500; multiplier = 2.5; new equilibrium income = ₦1,750
Correct Answer
D
Correct Option:
Equilibrium income Y = ₦1,500; multiplier = 2.5; new equilibrium income = ₦1,750

About This Question

This is Neco 2023 Economics Question 25. It is one of the objective questions from the 2023 Neco Economics examination.

Difficulty level: Medium .

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