Given the following simple Keynesian model: E = C + I + G + X MI
Question:
E = C + I + G + X – M………………………I = 150
C = 50 + 0.85Yd …………………………….G = 300
Yd = Y – T…………………………………... X = 80
T = 400………………………………………M = 10 + 0.05Y
Y = E in equilibrium
(a) Determine the equilibrium level of income.
(b) When the equilibrium income level is attained, is there a surplus or a deficit in the current account? Of how much?
(c) What is the size of the autonomous spending multiplier?
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