If the consumption function is C = 100 - 0.75Y, I = 200, and government spending is
Question:
If the consumption function is C = 100 - 0.75Y, I = 200, and government spending is 200, what will be the equilibrium level of output? Demonstrate your answer with a Keynesian cross diagram. What happens to aggregate output if government spending rises by 100?
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To find the equilibrium level of output we can use the Keynesian Cross model which shows the relatio...View the full answer
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Related Book For 
The Economics Of Money Banking And Financial Markets
ISBN: 9780321584717
4th Canadian Edition
Authors: Frederic S. Mishkin, Apostolos Serletis
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