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Questions › IIT JAM › IIT JAM 2023 › Q45
1 markMacroeconomics › Keynesian cross and the multiplier › Government spending and tax multipliersModerateabout 2 min

IIT JAM 2023 Question 45: Keynesian cross and the multiplier

In a Keynesian Cross model with C=C0+b(Y−T)C=C_0+b(Y-T)C=C0​+b(Y−T), T=T0+tYT=T_0+tYT=T0​+tY, Y=C+I0+G0Y=C+I_0+G_0Y=C+I0​+G0​, and b=0.7b=0.7b=0.7, t=0.2t=0.2t=0.2, the value of the Keynesian multiplier is ________ (round off to 2 decimal places).

Answer and worked solution

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Plain-text version

In a Keynesian Cross model with C=C₀+b(Y-T), T=T₀+tY, Y=C+I₀+G₀, and b=0.7, t=0.2, the value of the Keynesian multiplier is (round off to 2 decimal places).

Also written as: In a Keynesian Cross model with C=C_0+b(Y-T), T=T_0+tY, Y=C+I_0+G_0, and b=0.7, t=0.2, the value of the Keynesian multiplier is (round off to 2 decimal places).

Keynesian cross and the multiplier has come up 167 times in 7 exams since 2006.

What this question tests

This question is on Government spending and tax multipliers, part of Keynesian cross and the multiplier in Macroeconomics.

The effect on income of changes in government spending, lump-sum taxes, transfers and income taxes.

TestStop has 45 past-paper questions on this subtopic; the nearest in year are below.

  • GATE 2023 · Q60Consider the Keynesian Cross Model with a linear consumption function and a zero tax, where the government…
  • IIT JAM 2022 · Q46With C = C₀ + b(Y - T), T = T₀ + tY, Y = C + I₀ + G₀, b = 0.75 and t = 0.1, an increase in G₀ by Rs. 20…
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