simple multiplier . . . (1 Viewer)

[launcher169]

Launcher- that is only half the eq. income equation.
Here is how I worked it out:
For eq. income:
C+I=C+S
0.75Y + 1000 +500= 0.75Y +1000 + 0.25Y -1000
Gives you eq. income of $6000

& the MPS= 0.25
therefore the multiplier amount= $2000

So the answer is $8000

look, i did basically the same thing as you did however, i didnt express myself properly - hopefully i will be able to do a better job in the exam
which ever way that you do it as long as you get the answer its all good right?...lol

 

[rumour]

you'll be my e-best friend if you do. :uhhuh:

Okay, I'll try to do it before the eco HSC
Hey I have to look for it, & this is the only eco revision that I have done these past 3 weeks!!!


Launcher- sorry I only noticed that you did the same thing, after I posted that

 

[i-color]

Hmm so what's the answer? Cos I got $6000......

Y = 1000 + 0.75(Y)
therefore equilibrium income originally was $4000

and k = 1/1-0.75 = 4
therefore change of I by $500 makes equilibirum income change by $2000.....

therefore new equilibirum income is $6000?....

i must've gone wrong somewhere if it's $8000......cos the C+I = C+S looks right to me from above

 

[ToO LaZy ^*]

or should it be:
k.2000
4.2000
= 8000?..

i dunno, i have very little idea on how this works..

 

[rumour]

Hmm so what's the answer? Cos I got $6000......

Y = 1000 + 0.75(Y)
therefore equilibrium income originally was $4000

and k = 1/1-0.75 = 4
therefore change of I by $500 makes equilibirum income change by $2000.....

therefore new equilibirum income is $6000?....

i must've gone wrong somewhere if it's $8000......cos the C+I = C+S looks right to me from above

How did you get the:
Y= 1000 + 0.75Y?

 

[i-color]

Well that's the consumption formual
C = Co + MPC(Y)

OHHHH i know where i went wrong now....
cos C = 1000 + 0.75Y
at equilibrium Y = C + I = C + S

therefore

Y = 1000 + 0.75Y + 500
therfore, 0.25Y = 1500
Y = $6000

and again with simple multiplier, chang ein national income is $2000
therefore new equilibirum is $8000....

ah yes.....

 

[rumour]

you'll be my e-best friend if you do. :uhhuh:

Sorry it took me so long, I was busy, but I finally found it:

(Sorry for the messy handwriting )


EDIT:
Does not seem to be working

Don't worry

 

[aditya]

seriously.... at y = 8000.... how does investent = savings... investment = savings has to occur when the economy is at equilibirum :|

considering the consumption function is .25(8000) = 2000...... im confused :S the answer should be 4000 no?


I = S goddamnit

 

[aditya]

no seriously help?

 

[i-color]

savings function is

-1000 + 0.25(Y)

if Y = 8000, then Savings= -1000 + 0.25(8000) = $1000 which equals investment (since investment increased by $500 from $500 at new equilibrium)

 

[rumour]

Okay just give me your e-mail address & I'll e-mail you the diagram, cause it doesn't seem to want to load !!!!

 

[ToO LaZy ^*]

 

[rumour]

It's taking a long time to upload

arrrgghhh stupid computer!!!

EDIT:
It has been sent to too lazy & if he is nice then he will post it up!!!

 

[aditya]

ahhh nice...