Consider an economy that is open to foreign trade and described by the following model: C = 200 + 0.65Y I = 350 G = 500 X = 250 Z = 300 t = 15% m = 20% Yf = 2 000. Where: C = consumption I = investment G = government spending t = tax rate X = exports Z = imports M = marginal propensity to import Yf = full employment income Y = income. 1.1 Calculate the multiplier of the economy. (3) 1.2 Calculate the total autonomous spending. (2) 1.3 Calculate the equilibrium income for this economy. (3) 1.4 Calculate the amount of government spending required to reach full employment level of income. (4) 1.5 Based on the value of net exports, what conclusions can be made about the economy in question? (5) 1.6 Briefly explain the effect of an increase in the tax rate on the multiplier.

Consider an economy that is open to foreign trade and described by the following model: C = 200 + 0.65Y I = 350 G = 500 X = 250 Z = 300 t = 15% m = 20% Yf = 2 000. Where: C = consumption I = investment G = government spending t = tax rate X = exports Z = imports M = marginal propensity to import Yf = full employment income Y = income. 1.1 Calculate the multiplier of the economy. (3) 1.2 Calculate the total autonomous spending. (2) 1.3 Calculate the equilibrium income for this economy. (3) 1.4 Calculate the amount of government spending required to reach full employment level of income. (4) 1.5 Based on the value of net exports, what conclusions can be made about the economy in question? (5) 1.6 Briefly explain the effect of an increase in the tax rate on the multiplier.