An economy has the following consumption function: C = 200 + 0.8DI The government budget is balanced,
Question:
An economy has the following consumption function:
C = 200 + 0.8DI
The government budget is balanced, with government purchases and taxes both fixed at $1,000. Net exports are $100. Investment is $600. Find equilibrium GDP.
What is the multiplier for this economy? 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?
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Y C I G X IM C 200 08Y 1000 C 200 08Y 800 C 600 08...View the full answer
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Related Book For 
Macroeconomics Principles And Policy
ISBN: 9780324586213
11th Edition
Authors: William J. Baumol, Alan S. Blinder
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