multiple choice help (1 Viewer)

[osak23]

hi guys need help on this question

Year	Y ($M)	C ($m)
1	500	150
2	600	180
3	?	240

What would be the equilibrium level of income in year 3 if consumption (C) in this economy increases by $240 M in year 3 and the MPC remains constant?
a) $200m
b)700m
c)800 m
d) 900 m

the answer is C

can someone explain this please?
i keep getting a figure close to B....


Also

http://www.boardofstudies.nsw.edu.au/hsc_exams/hsc2010exams/pdf_doc/2010-hsc-exam-economics.pdf

can someone explain to me how to do question 7 with the CPI figures..

and also question 16 ( fixed E.R )

thanks in advance!!

 

[tarod]

1.
MPC = change in C/ Change in Y
= (180-150)/ (600-500) = 0.3
In year 3, change in Y = 60
MPC = 0.3 = 60/ (change in Y)
Change in Y = 60/ 0.3 = 200
200+ 600 = 800 (C)

2. Inflation is the change in CPI from the base year. So, you calculation the change: {CPI(current) - CPI(base)}/CPI base
Then, multiply by weighing factor. Do this for each good and find the highest

3. Basically, in a boom, an economy would want its exchange rate to appreciate to control imported inflation. By contrast, in a recession, an economy would want its exchange rate to depreciate so its exports would gain international competitiveness.

(A) is the only one that fits this.

 

[osak23]

ah ok

thanks bro!!!!