fiscal policy...有冇人知條式係咩ar~thx~

I give you a correct answer

First , the question say the government spending and lump sum tax by the same amount , it imply that you should use a balance budget multiplier .
Whatever the government budget is given deficit , it does not affect the multiplier . It is impossible that rasing the national income can use without the multiplier effect . I cannot find any AL text book have not talk about the multiplier

The balance budget multiplier is the sum of income multiplier ( expenditure multiplier ) plus tax multiplier . If you concentrate during your economic lesson , you will understand what I am talking about

c= marginal propensity to consume
t = proportional tax rate

In this case , therefore , the economy have a proportional tax , the income multiplier is
1 / (1-c+ct)
When you substitute the number , the income multiplier is 2.5

Then , the tax multiplier is
-c / (1-c+ct)
When you substitute the number , the tax multiplier is -2

At a result , balance budget multiplier is
1 / (1-c+ct) + -c / (1-c+ct)
=( 1-c ) / (1-c+ct)
That is the balance budget multiplier

We can substitute the number of your question
We get
( 1-0.8 ) / ( 1-0.8+0,8*0.25 )
=0.5
Balance budget multiplier = 0.5

The economy want to improve the national income to $40 billion in order to obtain the full employment national income

ΔY=ΔG*k

Y = national income
G = government expenditure
k = Balance budget multiplier

Substitute the number into the equation

$40 billion = ΔG*0.5
ΔG = $80 billion

The government should increase the expenditure $80 billion , also the lum sum tax amount $80 billion

If you do not believe it , you can copy it and ask your teacher

唔好學埋啲錯嘢，題目一早講明係
The government plans to stimulate GDP by increasing the government spending and lump sum tax by the same amoun
就一定要用balance budget multiplier

2006-12-09 02:15:41 補充：
你自己可以睇番 Chan & Kwok 入面有講，第一個人個做法我見都未見過，如果係佢啱，我可以向佢叩頭同下跪。

2006-12-09 22:53:31 補充：
你哋以家讀緊中六嫁，咁就要 sorry 先。因為我以為你哋係中七，不過你個老師教 Macroeconomic 先都比較特別啲，係有少少唔正常。不過最好上堂留心多少。

2006-12-10 00:24:26 補充：
都可以咁講，balance budget multiplier 最重要理念係題目講政府要進行平衡預算，先可以用。唔同情況下 multiplier 會有唔同，所以 balance budget multiplier 永遠都係income multiplier + tax multiplier

In order to achieve full employment, the aggregate planned expenditure (AE) curve should shift up by
ΔAE = $[40 - 40(0.8)] billion = $8 billion, where MPC = 0.8
Since the increase in G and lump sum tax (To) are the same, we have
-0.8ΔTo + ΔG = 8 and ΔTo = ΔG
By simple substitution, ΔG = ΔTo = $40 billion
Thus, the increasing govt. spending should be $40 billion in order to achieve full employment.

2006-12-09 00:22:30 補充：
呢條題目同我ge econ problem set question一模一樣.........

2006-12-09 20:42:47 補充：
我想話呢...我地唔會學balanced budget multiplier所以唔用得各下所講o既方法...係wo~~你想知正確答案...不如問下同班tutor d人點計丫~~

2006-12-09 21:20:26 補充：
不過...名先生唔洗咁串o既~呢度都係公開俾人討論姐...同埋...我地讀左econ三個月ja~

2006-12-09 23:30:54 補充：
咁我想問...govt spending multiplier + lump-sum tax multiplier係咪ALWAYS等於balanced budget multiplier?