Autonomous aggregate expenditures decreases by $200 million, the marginal propensity to consume is 0.50, marginal propensity to
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Question:
- 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.
- 2. Summarize the arguments for having a central bank that is independent from government.
- 3. You are given the following information on the macroeconomy:
- Consumption: 200 + 0.75Y
- Investment: 100 + 0.10Y
- Government Spending 500
- Exports 100
- Imports 50 + 0.25Y
- 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.
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