Essay Macroeconomics – Differentiate Between Demand-Pull and Cost-Push Inflation – Economics Assignment Help

Assignment Task:

Question 1: The following information is given for a particular economy:

Planned Investment 200

Government Spending 450

Exports 150

Imports 100

Autonomous taxes 400

a) If income is 2000, then aggregate consumption is 1330 where as if income is 2500, then aggregate consumption is 1730. Write down the consumption function as a function of output. 

b) Calculate equilibrium output level 

c) What is the value of the multiplier and explain your answer?  

d) Suppose the government decides to decrease his spending by 50.

i. By how much will the equilibrium output change 

ii. Illustrate graphically and explain the change in equilibrium output when government spending had decrease by 50.

Question 2: Differentiate between demand pull and cost push inflation while emphasing on the factors causing the types of inflation.