Consider an economy in which the consumption function takes the following simple algebraic form: C = 300
Question:
Consider an economy in which the consumption function takes the following simple algebraic form:
C = 300 + 0.75DI
and in which investment (I) is always $900 and net exports are always -$100. Government purchases are fixed at $1,300 and taxes are fixed at $1,200. Find the equilibrium level of GDP, and then compare your answer to Table and Figure.
Transcribed Image Text:
FIGURE 2 Construction of the Expenditure Schedule X-IM--$100 6,100 6,000 4,800 $900 3,900 5,200 5,600 6,000 6400 6,800 7,200 Real GDP
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Y C I G X IM C 300 075DI C 300 075Y 1200 C ...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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