10 Questions
In a 3-sector economy with a lump-sum tax system, the equilibrium condition can be represented as Y = E = C + I + G. What does 'C' represent in this equation?
Consumption function
When calculating equilibrium income in a three-sector economy, what is the formula used to calculate disposable income (Yd)?
Yd = Y - T
Which component of government expenditure is included in the equilibrium condition equation Y = E = C + I + G?
G
In a two-sector model, what does the term 'Leakages' typically refer to?
Savings
For a three-sector model, which factor usually represents the 'Savings' component?
Tax
If the total tax function is represented as Tx = 400 + 0.1Y, what does the coefficient '0.1' signify in this context?
The variable tax rate
In the given hypothetical economy, if the consumption function is described as C = 9675 + 0.75Yd, what does '9675' represent in this equation?
Fixed consumption amount (C0)
When calculating equilibrium income, if the total tax function is T = -80 + 0.2Y, what does '-80' signify within this function?
A fixed tax rebate
What does 'I = 6000' represent in the context of the given hypothetical economy information?
'I' as investment amount
In a three-sector model with a lump-sum tax system, if the equilibrium condition equation is given as Y = 1/(1-c)(C0 + I0 + G0 - cT0), what role does '(1-c)' play in this equation?
'1-c' acting as a multiplier for disposable income
Test your knowledge on government expenditure and transfer payments including welfare and social security payments. Learn about the components of the total tax function and how lump-sum tax and income tax are calculated.
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