9-4 Homework: Problem Set

Homework: Problem Set

GDP

Taxes

DI

C

I

G

C+I+G

1250

200

1050

800

300

200

1300

1500

200

1300

1000

300

200

1500

1750

200

1550

1200

300

200

1700

2000

200

1800

1400

300

200

1900

2250

200

2050

1600

300

200

2100

2500

200

2300

1800

300

200

2300

2750

200

2550

2000

300

200

2500

Solution

1. Calculation of Disposable Income (DI) at each level of GP is given below:

At GDP=1250, the Disposable Income is calculated as Disposable Income= (GDP-Taxes)

Substituting values from the table:

Disposable Income= (1250-200) = 1050

At GDP=1500, the Disposable Income is calculated as Disposable Income= (GDP-Taxes)

Substituting values from the table:

Disposable Income= (1500-200) = 1300.

At GDP=1750, the Disposable Income is calculated as Disposable Income= (GDP-Taxes)

Substituting values from the table:

Disposable Income= (1750-200) = 1550

At GDP=2000, the Disposable Income is calculated as Disposable Income= (GDP-Taxes)

Substituting values from the table:

Disposable Income= (2000-200) = 1800

At GDP=2250, the Disposable Income is calculated as Disposable Income= (GDP-Taxes)

Substituting ...