Consider an economy in which tax collections are always $400 and in which the four components of

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Consider an economy in which tax collections are always $400 and in which the four components of aggregate demand are as follows:

Find the equilibrium of this economy graphically. What is the marginal propensity to consume? What is the multiplier? What would happen to equilibrium GDP if government purchases were reduced by $60 and the price level remainedunchanged?

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Macroeconomics Principles And Policy

ISBN: 9780324586213

11th Edition

Authors: William J. Baumol, Alan S. Blinder

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Question Posted: Sep 01, 2012 02:47 AM

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Consider an economy in which tax collections are always $400 and in which the four components of

Question:

GDP Taxes DI (X-IM) $1,360 $400 $960 $720 $200 $500 $30 1,480 400 1,080 810 200 500 30 1,600 400 1,200 900 200 500 30 1,720 400 1,320 990 200 500 30 1,840 400 1,440 1,080 200 500 30

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Figure Equilibrium GDP is 1720 The marginal propensity to consume is 075 and ...View the full answer

Macroeconomics Principles And Policy

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