Question:
Consider a Keynesian Cross Model with following features,
Consumption Function: C = C0 + b(Y-T)
Tax Function: T = T0 + tY
Income Identity: Y = C + I0 + G0
Where, C = Consumption; Y = Real Income; T = Tax; I = Investment;
G = Government Expenditure; b = Parameter; t = Tax Rate
(The subscript 0 (zero) indicates that the concerned variable is autonomous)
If b = 0.7 and t = 0.2, value of the Keynesian multiplier is ________ (round off to 2 decimal places).
Consider a Keynesian Cross Model with following features,
Consumption Function: C = C0 + b(Y-T)
Tax Function: T = T0 + tY
Income Identity: Y = C + I0 + G0
Where, C = Consumption; Y = Real Income; T = Tax; I = Investment;
G = Government Expenditure; b = Parameter; t = Tax Rate
(The subscript 0 (zero) indicates that the concerned variable is autonomous)
If b = 0.7 and t = 0.2, value of the Keynesian multiplier is ________ (round off to 2 decimal places).
Consumption Function: C = C0 + b(Y-T)
Tax Function: T = T0 + tY
Income Identity: Y = C + I0 + G0
Where, C = Consumption; Y = Real Income; T = Tax; I = Investment;
G = Government Expenditure; b = Parameter; t = Tax Rate
(The subscript 0 (zero) indicates that the concerned variable is autonomous)
If b = 0.7 and t = 0.2, value of the Keynesian multiplier is ________ (round off to 2 decimal places).
Updated On: Oct 1, 2024
Hide Solution
Verified By Collegedunia
Correct Answer: 2.25
Solution and Explanation
The correct answer is: 2.25 or 2.29 (approx.)
Was this answer helpful?
0
0
Top Questions on Business cycles and economic models
- In the case of a small open economy with fixed exchange rate regime and imperfect capital mobility, which of the following is/are CORRECT?
- IIT JAM EN - 2024
- Macroeconomics
- Business cycles and economic models
- Suppose the price elasticity of demand ($e_D $) is − 1/5 and the price elasticity of supply ($e_s$ ) is 2/5 . Then, the incidence of a specific (or unit) tax on the firms is equal to
- IIT JAM EN - 2024
- Macroeconomics
- Business cycles and economic models
- For a positively sloped LM curve, which of the following statements is CORRECT?
- IIT JAM EN - 2023
- Macroeconomics
- Business cycles and economic models
- Which of the following statements is NOT CORRECT in the context of an Open Economy IS-LM Model under Floating Exchange Rate (with fixed price) and Perfect Capital Mobility?
- IIT JAM EN - 2023
- Macroeconomics
- Business cycles and economic models
- The following table provides a list of countries selling Big Mac and market exchange rates in January 2019.
Country Big Mac
(Price in local currency)Market Exchange Rate
(Local currency per USD)United States 5.58 USD 1.00 Norway 50.00 Kroner 8.53 Kroner/USD Japan 390.00 Yen 108.44 Yen/USD Mexico 49.00 Pesos 17.31 Pesos/USD China 20.90 Yuan 6.85 Yuan/USD Russia 110.17 Rubles 66.69 Rubles/USD India 178.00 Rupees 69.69 Rupees/USD
Using the above information, the cheapest price (in USD) of Big Mac is _______ (round off to 2 decimal places).- IIT JAM EN - 2022
- Macroeconomics
- Business cycles and economic models
Questions Asked in IIT JAM EN exam
- Consider the matrix \( A = \begin{bmatrix} 4 & -1 \\ 12 & -3 \end{bmatrix} \).
The value of the determinant of \( A^5 \) is .......... (rounded off to two decimal places).- IIT JAM EN - 2025
- Linear Algebra
The sum of the payoffs to the players in the Nash equilibrium of the following simultaneous game is ............
Player Y C NC Player X X: 50, Y: 50 X: 40, Y: 30 X: 30, Y: 40 X: 20, Y: 20 - IIT JAM EN - 2025
- Economics and economic theories
- Consider the economy described by the following: \[ Y = C + I + G \quad \text{with} \quad Y = 5000, \, G = 1000, \, T = 1000, \quad \text{and} \quad C = 250 + 0.75(Y - T), \] where \( Y \), \( C \), \( I \), \( G \), and \( T \) are national income, private consumption spending, investment expenditure, government expenditure, and tax revenue respectively. In this economy, private saving is ............
- IIT JAM EN - 2025
- Microeconomics
- Lerner Index (\( L \)), a measure of market power, is defined as \( L = \frac{P - MC}{P} \), where \( P \) and \( MC \) are, respectively, price and marginal cost of a firm. If a profit maximizing firm faces the demand curve \( P^2 Q = 7 \), the value of \( L \) is ............ (rounded off to one decimal place).
- IIT JAM EN - 2025
- Microeconomics
- You are tossing a fair coin repeatedly until a ‘Head’ appears. The expected number of tosses required for a ‘Head’ to appear is ...........
- IIT JAM EN - 2025
- Probability
View More Questions