4. An economy has the following characteristics. All values are in $millions.C = 120 + 0.9YDYD = Y + TR - TT = 100 + 0.1YI = 500G = 600TR = 200X = 700IM = 300 + 0.2YWhere C is consumption, YD is disposable income, T is taxes, TR is transfer payments, I is investment, G is government expenditure, X is exports and IM is imports.a) What is the value of the marginal propensity to save?b) What is the value of the autonomous expenditure multiplier?c) Calculate the value of the equilibrium level of real GDP?d) Suppose that the full employment level of GDP is $5000m. State the type of output gap persistent in this economy and calculate its size.e) Suppose the government aims to stimulate the economy as the result of the output gap in (d) above. Explain which macroeconomic policy action you would recommend. Give both the direction and the magnitude of your policy action.
This question was answered on: Sep 21, 2023
This attachment is locked
Our expert Writers have done this assignment before, you can reorder for a fresh, original and plagiarism-free copy and it will be redone much faster (Deadline assured. Flexible pricing. TurnItIn Report provided)
Sep 21, 2023EXPERT
We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.
You can also use these solutions: