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1. R 20 million of new investment has been added to the South African economy, the current MPS is
0.40, and tax rate (t) is 0.12. By how much will aggregate spending and income increase as a result of
the R20 million increase in investment spending (7 marks).

Answer :

ATLEGANGBONGANEGO

Answer:

Yes

Explanation:

because south Africa can't put the money on the side

As a result of the R20 million increase in investment spending, the aggregate spending and income will increase by R38.462.

What is income?

Income, which is typically stated in monetary terms, is the spending and saving opportunity acquired by an entity within a given duration. Conceptually, income is difficult to define, and different fields may have distinct definitions.

When a new investment of R 20 million had been made with the aim of income increase in the South African economy, the current MPS is 0.40, and the tax rate (t) is 0.12.

Now the question that rises is what will be the aggregate spending and income increase as a result of the R20 million increase in investment spending. For this, the calculation will be as follow:

Multiplier will be = 1/ (MPS+MRT) = 1/(0.40 +0.12) = 1/0.52 = 1.923

Thus, the aggregate spending and income increment will be = R20 * 1.923 = R38.462.

Learn more about income from here:

https://brainly.com/question/14732695

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