• We are pleased to announce that the winner of our Feedback Prize Draw for the Winter 2024-25 session and winning £150 of gift vouchers is Zhao Liang Tay. Congratulations to Zhao Liang. If you fancy winning £150 worth of gift vouchers (from a major UK store) for the Summer 2025 exam sitting for just a few minutes of your time throughout the session, please see our website at https://www.acted.co.uk/further-info.html?pat=feedback#feedback-prize for more information on how you can make sure your name is included in the draw at the end of the session.
  • Please be advised that the SP1, SP5 and SP7 X1 deadline is the 14th July and not the 17th June as first stated. Please accept out apologies for any confusion caused.

November 2012 Q31 , IAI

D

divyam sankharva

Member
The question is ,
C=100 8Yd, where Yd is disposable income . Suppose there are no tax and so Y=Yd , investment 50 ,govt expenditure 50 , find savings
solving this i got 100 , but solution is 50 , they have equated investment and savings is there an error?
 
I think the solution is wrong too.

The eqbm Y is given by:

Y = C + I + G + X

ie Y = 100 + 0.8Y + 50 + 50

So, Y* = 1000

By definition, all income recieved is either spent on C or withdrawn, so:

Y = C + S + T + M

Here:

C = 100 + 0.8 * 1000 = 900

So, withdrawals must equal 100.

As T = 0 and M isn't mentioned so, we assume it's also 0, so S must equal 100.

Or more simply, in eqbm J = W so (assuming X and M = 0 as they're not mentioned in the question):

50 + 50 + 0 = S + 0 + 0

So, S = 100
 
Back
Top