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Questions › JNU › JNU SSS 2014 › Q36
2 marks, −0.5Macroeconomics › Keynesian cross and the multiplier › Multiplier extensions: induced investment and class savingModerateabout 1 min

JNU SSS 2014 Question 36: Keynesian cross and the multiplier

Suppose in an economy in any period ttt the aggregate value of output is Y(t)=C(t)+I(t)Y(t) = C(t) + I(t)Y(t)=C(t)+I(t), the sum of aggregate consumption and investment expenditures.

Suppose C(t)=0⋅6Y(t)+0⋅3Y(t−1)C(t) = 0{\cdot}6Y(t) + 0{\cdot}3Y(t - 1)C(t)=0⋅6Y(t)+0⋅3Y(t−1) and I(t)=1000I(t) = 1000I(t)=1000 for all ttt. What is the only value of output which, once attained in this economy, will continue to persist over time?

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Suppose in an economy in any period t the aggregate value of output is Y(t) = C(t) + I(t), the sum of aggregate consumption and investment expenditures. Suppose C(t) = 0·6Y(t) + 0·3Y(t - 1) and I(t) = 1000 for all t. What is the only value of output which, once attained in this economy, will continue to persist over time? (A) 2000 (B) 2500 (C) 4000 (D) 10000

Also written as: Suppose in an economy in any period t the aggregate value of output is Y(t) = C(t) + I(t), the sum of aggregate consumption and investment expenditures. Suppose C(t) = 0*6Y(t) + 0*3Y(t - 1) and I(t) = 1000 for all t. What is the only value of output which, once attained in this economy, will continue to persist over time?

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

What this question tests

This question is on Multiplier extensions: induced investment and class saving, part of Keynesian cross and the multiplier in Macroeconomics.

The multiplier when investment responds to income or when groups have different saving behaviour.

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Question from the JNU SSS 2014 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.