A2 ECONOMICS: Guess Paper-4

[Bint]

When national income equals $40 000 million and government spending equals $15 000 million,
an economy is in equilibrium below full employment. Out of every increase of $100 in national
income, $15 is taken in taxes, $30 is spent on imports and $5 is saved.
To raise national income to the full employment level of $50 000 million, to which level will the
government need to raise its own spending?
A

$15 500 million
B

$20 000 million
C

$25 000 million
D

$35 000 million

C
an some one please explain this one to me?? i dont get it... thanks!

 

[naheelnisar]

http://www.xtremepapers.com/papers/... AS Level/Economics (9708)/9708_s11_qp_32.pdf
question 15 why automatic stablisers ?

 

[AGEG]

When national income equals $40 000 million and government spending equals $15 000 million,
an economy is in equilibrium below full employment. Out of every increase of $100 in national
income, $15 is taken in taxes, $30 is spent on imports and $5 is saved.
To raise national income to the full employment level of $50 000 million, to which level will the
government need to raise its own spending?
A

$15 500 million
B

$20 000 million
C

$25 000 million
D

$35 000 million

C
an some one please explain this one to me?? i dont get it... thanks!

the multiplier is 2, you get this from 1/1-mpc, so 1/0.5 = 2

that means that government will need to increase it's expenditure by 5 million in order for national income to become 50 k m (5x2 = 10 k m)

So 15 + 5 = 20, so the answer would be B.

Hope that clears it up.

 

[Bint]

the multiplier is 2, you get this from 1/1-mpc, so 1/0.5 = 2

that means that government will need to increase it's expenditure by 5 million in order for national income to become 50 k m (5x2 = 10 k m)

So 15 + 5 = 20, so the answer would be B.

Hope that clears it up.

Thanks!!

 

[naheelnisar]

Thanks!!

multiplier 2 how

 

[AGEG]

Thanks!!

Glad you understood it, el 7amd le Allah.

 

[Bint]

multiplier 2 how

Multiplier is 1 divided by marginal propensity to tax, save and import and all the value are given so we find the multiplier

 

[AGEG]

multiplier 2 how

Since the multiplier is 1/mpw or 1/1-mpc.

As you can see the mpw is 0.5, since out of every increase in income of 100, 50 is taxed/saved/used on imports.

1/0.5 = 2.

 

[Bint]

Got it? naheelnisar

 

[naheelnisar]

Got it? naheelnisar

yeeaaah got it now !

 

[Bint]

0.5 how it came i dunt get this we have to use this formula 1/mpw?

ok see taxed is $15 saved is $5 and spend on imports is $30 right? so add them up u will get $50 so in percentage form its 50% of the $100 or 0.5 so u take 1/0.5 as the multiplier ok??

 

[naheelnisar]

ok see taxed is $15 saved is $5 and spend on imports is $30 right? so add them up u will get $50 so in percentage form its 50% of the $100 or 0.5 so u take 1/0.5 as the multiplier ok??

got it finally ! em so weak at macro.. thinking of reviisng the chap will that help ? or shud i just do pastpprs? wat do u sugest ?

 

[Bint]

got it finally ! em so weak at macro.. thinking of reviisng the chap will that help ? or shud i just do pastpprs? wat do u sugest ?

i must say flip through ur notes once i will also go through my notes in the morning but dont get all tensed and nervous it will be easy inshaAllah

 

[naheelnisar]

i must say flip through ur notes once i will also go through my notes in the morning but dont get all tensed and nervous it will be easy inshaAllah

IN SHAA ALLAH IN SHAA ALLAH il still need ur hlp in questns

 

[Bint]

IN SHAA ALLAH IN SHAA ALLAH il still need ur hlp in questns

hurry because i have to go in a while i have to sleep

 

[naheelnisar]

umm okay then u can go

 

[Bint]

A product with infinite elasticity of supply has sales of 1000 units a week at a price of $1 per unit.
Price elasticity of demand is 1.5 over the relevant range.
The government imposes a tax of 10 %.
What will be the government’s weekly tax revenue?
A$15
B $85
C $100
D $150

How do we do this one??

 

[naheelnisar]

A product with infinite elasticity of supply has sales of 1000 units a week at a price of $1 per unit.
Price elasticity of demand is 1.5 over the relevant range.
The government imposes a tax of 10 %.
What will be the government’s weekly tax revenue?
A$15
B $85
C $100
D $150

How do we do this one??

can u telme the year i hve solved this one already

 

[Bint]

may june 2011

 

[naheelnisar]

A product with infinite elasticity of supply has sales of 1000 units a week at a price of $1 per unit.
Price elasticity of demand is 1.5 over the relevant range.
The government imposes a tax of 10 %.
What will be the government’s weekly tax revenue?
A$15
B $85
C $100
D $150

How do we do this one??

ped is already given i-e 1.5 multiply it wid govt tax revenuve 1.5 * 10=15... then take out 15% of 1000 that will be 150.. minus 150 from 1000 that will be 850.. then take out 10% of 850 that is 85