Given the Following Data for the Economy of Mokka

question 1

Essay

Given the following data for the economy of Mokka:
a)Calculate equilibrium GDP.
b)Calculate the multiplier.
c)If the tax function is: T = 30 + 0.2Y,calculate the government's budget balance.
d)Now change government spending by the amount of the surplus or deficit in an attempt to balance the budget.What will be the new equilibrium GDP?
e)What is the budget balance at the new equilibrium?

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Definitions:

Accounts Payable

Liabilities owed by a business to its creditors for purchases or services rendered that are expected to be paid off within a year.

Inventory Reduction

A strategy to decrease the amount of inventory that a company holds in order to improve cash flow or reduce storage costs.

Tax Refund

The amount of money returned to a taxpayer by the government when the taxpayer's paid taxes exceed their tax liability for a given year.