Question: Simple model and fiscal policy Econ 1221 Assignment Ch22 - The Simple Model & Fiscal Policy Instructions: For the following question, write your answers in

Simple model and fiscal policy

Econ 1221 Assignment Ch22 - The Simple Model & Fiscal Policy Instructions: For the following question, write your answers in the space provided. Answers must be hand-written. Upload a pdf of your answers to the assignment folder prior to the deadline. Consider a simple macro model with a constant price level and demand-determined output. We are given the following equations: C = 220 + 0.9Y, 1= 200, G = 100, T = 0.1Y, X = 80, IM - 0.1IY. Calculate the following values: a) The marginal propensity to spend (=). b) Calculate the simple multiplier (SM) in this economy. c) Equilibrium national income (Y*) I d) Suppose government expenditure suddenly increases by 30. Without determining the equilibrium level of national income, calculate the resulting change in equilibrium national income

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