Neco Model Questions Vol1 2018 Economics Question 7

The Central Bank of Nigeria released the following macro‑economic data for the year 2023 (all figures in ₦ billions): - Consumption expenditure (C) = 3 200 - Gross private domestic investment (I) = 800 - Government expenditure on goods and services (G) = 1 200 - Exports of goods and services (X) = 500 - Imports of goods and services (M) = 700 - Net factor income from abroad (NFIA) = –50 - Net taxes (T) = 300 - Net transfers received by households (TR) = 120 Additionally, the marginal propensity to consume (MPC) is estimated at 0.75. Answer the following: (a) Using the data above, compute the following national‑income aggregates: i. Gross Domestic Product (GDP) by the expenditure approach. ii. Gross National Product (GNP). iii. Net National Product (NNP) at market prices. (b) Suppose the government decides to increase net taxes (T) by ₦100 billion while keeping other components unchanged. Using the Keynesian consumption function C = C₀ + MPC·(Y – T + TR), estimate the new equilibrium level of national income (Y) and the change in equilibrium output resulting from the tax increase. Show all steps. (c) Briefly discuss two possible macro‑economic consequences of the change in equilibrium output you obtained in part (b) for the Nigerian economy.