Question 2 (20 marks) Consider an open economy that is described by the following model: C=150+0.45Y Where: Y=incomeC=consumptionI=350I=investmentG=400G=governmentspendingT=0.20YT=taxesX= 200X=exportsM=180M=autonomousimportsYf=2800Yf=fullemploymentincomelevel Note to student: show all your workings. Figures are in millions. 2.1 Calculate the multiplier. 2.2 Calculate the total autonomous spending. 2.3 Calculate the equilibrium income. 2.4 Calculate the total consumption at equilibrium. 2.5 Calculate the government budget and explain whether there is a surplus or a deficit. 2.6 Calculate the change in government spending required to reach a full employment level of income. Question 3 (10 marks) Provide reasons for the increase in government spending over the past years in South Africa..

1. Question 2 (20 marks) Consider an open economy that is described by the following model:
C=150+0.45Y Where:
Y=incomeC=consumptionI=350I=investmentG=400G=governmentspendingT=0.20YT=taxesX=
200X=exportsM=180M=autonomousimportsYf=2800Yf=fullemploymentincomelevel Note to
student: show all your workings. Figures are in millions. 2.1 Calculate the multiplier. 2.2
Calculate the total autonomous spending. 2.3 Calculate the equilibrium income. 2.4 Calculate the
total consumption at equilibrium. 2.5 Calculate the government budget and explain whether there
is a surplus or a deficit. 2.6 Calculate the change in government spending required to reach a full
employment level of income. Question 3 (10 marks) Provide reasons for the increase in
government spending over the past years in South Africa.