You are expected to show the relevant steps of your calculations. For an economy with a tax rate of 15%, the following expenditure functions are given; C = 150 + 0.8YD G = 750 I = 520 NX = 100 - 0.18Y
a) What is the marginal propensity to spend out of national income for this economy?
b) Compute the multiplier and the equilibrium level of national income.
c) Determine if the Budget Balance is a deficit or a surplus in equilibrium.
d) Calculate the equilibrium value of national asset formation.
e) In equilibrium, what is the total value of leakages from this economy?
f) If government increases its spending by 25%, and investment by 50%, what would be the equilibrium level of national income when all spending rounds are exhausted?