In the Keynesian income-expenditure model, equilibrium income is necessarily equal to a multiple ofGroup of answer choicesthe exogenous component of planned aggregate expenditure which is partly dependent on the autonomous component of taxation when government is includedthe autonomous component of consumption, regardless of whether the economy is closed or openthe sum of investment, government expenditure and net exportsnone of the other alternatives are correct.

Adding an external sector to the Keynesian income-expenditure model implies that for equilibrium, in terms of leakages and injectionsGroup of answer choicesplanned saving must equal planned investmentplanned saving must equal planned investment, government expenditure must equal total taxation and exports must equal imports it is not necessary for planned saving and planned investment to be equal but exports must be equal to imports it is not necessary for planned saving and planned investment to be equal but they are unequal then either the budget or the trade balance or both should not be equal to zero.

In the open-economy Keynesian income-expenditure model which includes a government sector with endogenous taxation, which of the following statements could apply to the process of adjustment towards an equilibrium?Group of answer choicesAn increase in government expenditure, without any changes in investment or exports must generate a matching change in the sum of saving, taxation and imports.An increase in investment by itself will generate a rise in saving, imports and taxation via changes in the level of income.An increase in injections would cause a matching increase in withdrawals because of the resulting change in the level of income occurring through the multiplier.All of the other statements are correct.

Consider the Keynesian income-expenditure model with a government sector but no foreign sector. Assume that taxation is partly endogenous and dependent on the level of income. Suppose that the government increases its expenditure by $200 million and also increases the exogenous component of taxation by $200 million. Taking the budget balance as being equal to total taxes less government expenditure, which of the following statements is correct?Group of answer choicesThe equilibrium level of income will increase by less $200 million and the budget balance would improveThe equilibrium level of income will decrease but the budget balance would actually improveThe equilibrium level of income will increase by more than $200 million and the budget balance will be unchangedThe equilibrium level of income will increase by $200 million and the budget balance will be unchanged.

According to the “paradox of thrift”, for the simple Keynesian income-expenditure model where there is no government or external sector,Group of answer choicesthe equilibrium level of income will be increased as a result of an increase in the proportion of income which households wish to save, although aggregate saving will not increasejust as with an individual who increases the proportion of income they save, if all individuals do this aggregate saving will increasean increase in the proportion of income which individuals wish to save, without a change in the marginal propensity to consume will decrease the size of the income-expenditure multiplierin the aggregate an increase in the proportion of income which households wish to save will not increase aggregate saving if the level of investment is unchanged.

In the Keynesian income-expenditure model which includes both a government sector and an external sector, an increase in autonomous consumption, government expenditure or investment combined with an increase in the marginal tax rateGroup of answer choiceswould increase the multiplier and reduce net exports, assuming the multiplier remains greater than onewould lead to a higher equilibrium level of income and an unchanged level of net exports while the multiplier would be reducedwould lead to an increase in net exports, assuming that the multiplier remains greater than onewould reduce the multiplier but, assuming this remains greater than one, equilibrium income would rise and net exports would fall.