    # Establishment Of National Earnings By Keynes Illustration 119

The fundamental equations in a dual sector economy are given as consumption function C = 600 + 0.65 Y, investment Ī = 600. You are required to determine the following.

1. Symmetry level of earnings
2. Symmetry level of consumption

Solution

In a dual sector economy, the symmetry level of earnings is

Y         =              1      (Ca + Ī)
1 – b

In the equation, Ca = 600, Ī = 600, b = 0.65

By substituting the above we get

Y         =               1       (600 + 600)
1 – 0.65

Y         =          1 / 0.35 (1200)

Y         =          2.85 x 1200

(a) Thus, the symmetry level of earnings is 3,429

In a dual sector economy, the consumption function is

C         =          Ca + b Y

In the above equation, Ca = 600, Ī = 600 and b = 0.65

By substituting the above values we obtain,

C         =          600 + 0.65Y

C         =          600 + 0.65 (3,249)

C         =          600 + 2111.85

C         =          2,711.85

(b) Thus the symmetry of level of consumption is 2,711.85

Illustration 120

The fundamental equations in a dual sector economy are given as: Consumption C = 500 + 0.6Y and the investment function Ī = 500.

1. Formulate the saving function
2. Ascertain the symmetry level of output the equating the saving leakages to the investment injections

Solution

The saving function is given by

S          =          Y – C

S          =          Y – 500 + 0.6Y

S          =          – 500 + 1Y – 0.6Y

S          =          – 500 + 0.4Y

(a) Hence, the saving function is given by S            =          - 500 + 0.4Y

The symmetry level of output can be ascertained by equating the saving leakages to the investment injections.

Thus,
- 500 + 0.4Y    =          500

- 500 - 500       =          - 0.4Y

- 1000              =          - 0.4Y

Or                                                        0.4Y                =          1000

Y         =          1000 / 0.4

Y         =          2,500

(b) Thus, the symmetry level of output is 2,500

Illustration 121

For a dual sector economy we have the following equation for consumption function

C = 360 + 0.5Y, ascertain the following

1. If investment in a year is \$65 millions what will be the symmetry level of earnings or output
2. If full employment level of earnings is \$860 millions what investment is required to be undertaken to ensure symmetry at full employment

Solution

Y         =          C + I

Y         =          360 + 0.5Y + 65

Y – 0.55Y       =          360 + 65

Y (1 – 0.5)      =          425

0.5Y                =          425

Y         =          425 / 0.50

Y         =          850

(a) Thus, if the investment in a year is \$65 millions, then the symmetry level of
earnings or Output (Y) will be 850

To make sure full employment symmetry investment must parity to the saving gap at full employment earnings. With the given full employment earnings equal to \$860 millions,

SF = YF – CF
Thus,
YF – (360 + 0.50YF)

860 – (360 + 0.50 (860))

500 – 0.50 (860)

SF        =          500 – 425

SF        =          75

(b) Thus, investment required for full employment symmetry is S75 millions

Illustration 122

If in a dual sector economy Consumption C = 750 + 0.45Y and Investment I = 1,110 then

1. Ascertain the symmetry level of earnings and consumption
2. Derive the saving function and ascertain the saving at the symmetry level
3. Ascertain the symmetry level of earnings by equating planned investment

Solution

The symmetry condition is given as Y = C + I

Thus,
Y         =          750 + 0.45Y + 1,110

Y         =          1,860 + 0.45Y

Y – 0.45Y       =          1,860

0.55Y              =          1,860

Y         =          1,860 / 0.55

=          3,381

(a)        Thus, the symmetry level of earnings (Y) is 3,381

The consumption function C = 750 + 0.45Y

When Y = 3,381

C         =          750 + 0.45(3,381)

C         =          750 + 1,521

C         =          2,272

1. Thus, the symmetry level of consumption C is 2,272

The saving function is given by S = Y – C

S          =          Y – (750 + 0.45Y)

S          =          Y – 0.45Y – 750

S          =          0.55Y – 750

(b)       Thus the saving function is given by S = 0.55Y – 750

At symmetry level,
S          =          0.55 (3,381) – 750

S          =          1860 – 750

S          =          1110

(b)       The saving function at Symmetry will be S = 1110

The planned saving is given by S        =          - 750 + 0.55Y

In symmetry, planned saving equals planned investment

Thus,
- 750 + 0.55Y  =          1110

0.55Y  =          1110 + 750

0.55Y  =          1860

Y         =          1860 / 0.55

Y         =          3,381

1. Thus, the symmetry level of earnings (Y) is 3,381

Online Live Tutor Symmetry level of earnings, Symmetry level of consumption, Consumption:

We have the best tutors in Economics in the industry. Our tutors can break down a complex Symmetry level of earnings, Symmetry level of consumption, Consumption problem into its sub parts and explain to you in detail how each step is performed. This approach of breaking down a problem has been appreciated by majority of our students for learning Symmetry level of earnings, Symmetry level of consumption, Consumption concepts. You will get one-to-one personalized attention through our online tutoring which will make learning fun and easy. Our tutors are highly qualified and hold advanced degrees. Please do send us a request for Symmetry level of earnings, Symmetry level of consumption, Consumption tutoring and experience the quality yourself.

Online Establishment of National Earnings By Keynes Help:

If you are stuck with an Establishment of National Earnings By Keynes Homework problem and need help, we have excellent tutors who can provide you with Homework Help. Our tutors who provide Establishment of National Earnings By Keynes help are highly qualified. Our tutors have many years of industry experience and have had years of experience providing Establishment of National Earnings By Keynes Homework Help. Please do send us the Establishment of National Earnings By Keynes problems on which you need help and we will forward then to our tutors for review.

Other topics under Macro Economics For Management:       • 