How often Keynesian income determination and the multiplier is asked

Where it was asked

• May/Jun 201227.5 marks
• Oct/Nov 201122.25 marks
• May/Jun 201129.75 marks

The questions

1. May/Jun 2012, Q2.33 marks

   Working within a Keynesian model of an open economy, use the diagram provided to illustrate the impact of an increase in autonomous imports on the equilibrium level of income. Remember to label your diagram fully.

2. May/Jun 2012, Q3.12 marks

   Question 3 is based on the following information describing a Keynesian model: consumption function C = 400 + 9/10 Yd; autonomous investment I-bar = 500; autonomous government spending G-bar = 1 280; the tax rate t = 1/3; autonomous exports X-bar = 900; the import function Z = 600 + 1/10 Y; and the full-employment level of income equal to 5 510. Candidates are required to calculate the following values, showing all calculations. Using the given consumption function C = 400 + 9/10 Yd, calculate the marginal propensity to save for this economy, showing all your workings.

3. May/Jun 2012, Q3.22 marks

   Question 3 is based on the following information describing a Keynesian model: consumption function C = 400 + 9/10 Yd; autonomous investment I-bar = 500; autonomous government spending G-bar = 1 280; the tax rate t = 1/3; autonomous exports X-bar = 900; the import function Z = 600 + 1/10 Y; and the full-employment level of income equal to 5 510. Candidates are required to calculate the following values, showing all calculations. Based on the information given (C = 400 + 9/10 Yd, I-bar = 500, G-bar = 1 280, t = 1/3, X-bar = 900, Z = 600 + 1/10 Y), calculate the value of the multiplier for this economy, showing all your workings.

4. May/Jun 2012, Q3.32 marks

   Question 3 is based on the following information describing a Keynesian model: consumption function C = 400 + 9/10 Yd; autonomous investment I-bar = 500; autonomous government spending G-bar = 1 280; the tax rate t = 1/3; autonomous exports X-bar = 900; the import function Z = 600 + 1/10 Y; and the full-employment level of income equal to 5 510. Candidates are required to calculate the following values, showing all calculations. Using the same information (C = 400 + 9/10 Yd, I-bar = 500, G-bar = 1 280, t = 1/3, X-bar = 900, Z = 600 + 1/10 Y), calculate the equilibrium level of income for this economy, showing all your workings.

5. May/Jun 2012, Q3.42 marks

   Question 3 is based on the following information describing a Keynesian model: consumption function C = 400 + 9/10 Yd; autonomous investment I-bar = 500; autonomous government spending G-bar = 1 280; the tax rate t = 1/3; autonomous exports X-bar = 900; the import function Z = 600 + 1/10 Y; and the full-employment level of income equal to 5 510. Candidates are required to calculate the following values, showing all calculations. Given that the full-employment level of income is 5 510, calculate the increase in exports that would be required to move this economy from its equilibrium level of income to the full-employment level of income, showing all your workings.