1. The following is information related to the components of aggregate expenditure in the economy of a country (all values in RM Million).
Consumption of C = 750 + 0.8Yd; Yd = Y - T; T = Tg-R
Investment I = 600
Government expenditure G = 450
Gross tax Tg = 300 + 0.25Y
Transfer fee R = 225
a)
i.Publish the leakage function in terms of income (Y).
ii.Calculate the equilibrium national income according to the leakage injection approach.
b) At the equilibrium level, calculate the value of consumption, savings, net taxes and government budget.
c) If the investment is reduced by RM200 million, how can the government maintaining equilibrium income levels through transfer payments.