Question:
Let the consumption function, tax function, and income identity be given by C = C0+b(Y-T), T = T0+tY, and Y=C+I0+ G0, respectively, where C0, I0, G0, and T0 are autonomous consumption, investment, government expenditure, and tax, respectively. If b = 0.75 and t = 0.1, then an increase in G0 by Rs. 20 million will increase Y by Rs. ______ million (round off to 2 decimal places).
Let the consumption function, tax function, and income identity be given by C = C0+b(Y-T), T = T0+tY, and Y=C+I0+ G0, respectively, where C0, I0, G0, and T0 are autonomous consumption, investment, government expenditure, and tax, respectively. If b = 0.75 and t = 0.1, then an increase in G0 by Rs. 20 million will increase Y by Rs. ______ million (round off to 2 decimal places).
Updated On: Oct 1, 2024
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Correct Answer: 61.52
Solution and Explanation
The correct answer is: 61.52 or 61.56 (approx.)
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