Aufgabe Vorschlag A - Aufgabe 3 · Abitur Hessen Wirtschaftslehre LK · bilingual Englisch 2021

The new production facilities that were built by AiRobotics are located in Indianapolis, Indiana. The company AiRobotics enlarged the already existing production plant in this US state because the government has promoted new industrial investments with transformational expenditures altogether amounting to USD 39 billion last year. In total, autonomous investments were USD 44 billion and transfer payments were increased to USD 46 billion, as the autonomous consumption of the households amounted to USD 71 billion in Indiana. The marginal propensity to consume of the households amounted to 95 % of the available income. Last year, the government of Indiana has decided not to take out any loans and has financed all expenditures by tax income which have increased a lot. The complete tax income shall either be spent on transformational or transfer payments.

3.1

Determine the consumption function for the population of Indiana. [2 BE]

3.2

Calculate the basic income for the economic area of Indiana. [3 BE]

3.3

Indicate the formula for the equilibrium level of income in general and calculate it for the state of Indiana. [5 BE]

3.4

The US government plans to implement increases of transfer or transformational payments. They have not decided yet whether to finance these governmental spendings by tax increase or by taking new loans.

Compare and assess the effectiveness of transfer and transformational payments:

a) if they are tax-financed

b) if they are debt-financed. [8 BE]