Waec Model Questions Vol1 2020 Economics Question 4

Practice objective / multiple choice question 4 from the 2020 Waec Model Questions Vol1 Economics examination.

Waec Model Questions Vol1 2020 Economics Objective / Multiple Choice Medium Difficulty
Question 4 WAEC_MODEL_QUESTIONS_VOL1 • 2020 • ECONOMICS • objective

In a closed economy the marginal propensity to consume (MPC) is 0.75 and the proportional income tax rate is 20 %. Autonomous consumption is ₦200 million, autonomous investment is ₦150 million and autonomous government spending is ₦100 million. (a) Compute the equilibrium aggregate income (Y) in million naira. (b) If government spending is increased by ₦50 million, by how much will equilibrium income change? Give your answers to one decimal place.

Answer Options

A. Y = 1000.0 million naira; ΔY = 100.0 million naira
B. Y = 1062.5 million naira; ΔY = 112.5 million naira
Correct Answer C. Y = 1125.0 million naira; ΔY = 125.0 million naira
D. Y = 1200.0 million naira; ΔY = 150.0 million naira
Correct Answer
C
Correct Option:
Y = 1125.0 million naira; ΔY = 125.0 million naira

About This Question

This is Waec Model Questions Vol1 2020 Economics Question 4. It is one of the objective questions from the 2020 Waec Model Questions Vol1 Economics examination.

Difficulty level: Medium .

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