(Solution) 11 An Economy Has The Following Consumption Function: C=200 + 0.8 DI The Government Budget Is Balanced, With Government Purchases And Taxes Both... | Snapessays.com


(Solution) 11 An economy has the following consumption function: C=200 + 0.8 DI The government budget is balanced, with government purchases and taxes both...


11 An economy has the following consumption function:

 

C=200 + 0.8 DI

 

The government budget is balanced, with government purchases and taxes both fixed at $1,000. Net exports are $100. Investment is $600.

 

1)Find equilibrium GDP.(1 point)

 

Calculation Procedure:

 

 

 

 

2)What is the multiplier for this economy?(1 point)

 

Calculation Procedure:

 

 

 

 

3)If G rises by $100, what happens to Y? What happens to Y if both G and T rise by $100 at the same time?(1 point)

 

Calculation Procedure:

 


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This question was answered on: May 23, 2022

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