1. Autonomous aggregate expenditures decreases by $200 million, the marginal propensity to consume is 0.50, marginal propensity to invest is 0.25, and the marginal propensity to import is 0.10. Calculate the change in income.
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3. 2. Summarize the arguments for having a central bank that is independent from government.
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5. 3. You are given the following information on the macroeconomy:
6. Consumption:                    200 + 0.75Y
7. Investment:                       100 + 0.10Y
8. Government Spending         500
9. Exports                             100
10. Imports                             50 + 0.25Y
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12. Compute the equilibrium level of income, the size of the multiplier, and the change in equilibrium income for an increase in autonomous consumption of $50 million.

Answer rating: 100% (QA)

1 To calculate the change in income we can use the concept of the multiplier The multiplier represents the change in equilibrium income resulting from a change in autonomous expenditures The formula f... View the full answer