Consider an economy described by the Income-Expenditure model where consumption is given by C= 400+(Y-T),government spending is 600, net taxes are 450 and investment is 300. 

a. What is the autonomous expenditure multiplier for this economy? What is the tax multiplier?

b. What is the equilibrium level of output?

c. If the consumption function shifts to C= 500+(Y - T),

i. what would be the new level of output?

ii. what would be the new level of consumption?

iii. what might cause such a change in the consume

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a The autonomous expenditure multiplier for this economy is k 1 1 MPC where MPC is the marginal ... View the full answer