Neco Model Questions Vol1 2021 Economics Question 10

Practice objective / multiple choice question 10 from the 2021 Neco Model Questions Vol1 Economics examination.

Neco Model Questions Vol1 2021 Economics Objective / Multiple Choice Medium Difficulty
Question 10 NECO_MODEL_QUESTIONS_VOL1 • 2021 • ECONOMICS • objective

In a closed economy, consumption is \( C = 50 + 0.8(Y - T) \), investment is \( I = 30 \), government spending is \( G = 20 \), taxes are \( T = 0.2Y \), and net exports are \( NX = -10 \).\ (a) Compute the equilibrium national income \(Y\).\ (b) If autonomous investment rises by 15 and net exports improve by 5 (so \(NX\) becomes -5), determine the new equilibrium \(Y\) and the change in income.\ (c) Calculate the fiscal multiplier.

Answer Options

Correct Answer A. a) Y = 250\n b) New Y ≈ 306, increase of about 56\n c) Multiplier ≈ 2.78
B. a) Y = 240 b) New Y ≈ 295, increase of about 55 c) Multiplier ≈ 2.5
C. a) Y = 260 b) New Y ≈ 315, increase of about 55 c) Multiplier ≈ 3.0
D. a) Y = 250 b) New Y ≈ 300, increase of about 50 c) Multiplier ≈ 2.6
Correct Answer
A
Correct Option:
a) Y = 250\n b) New Y ≈ 306, increase of about 56\n c) Multiplier ≈ 2.78

About This Question

This is Neco Model Questions Vol1 2021 Economics Question 10. It is one of the objective questions from the 2021 Neco Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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