Question: The extended goods market C = c 0 + c 1 (Y D ) Consumption function I = d 0 + d 1 i +

The extended goods market

C = c₀+ c₁(Y^D)Consumption function

I = d₀+ d₁i + d₂YInvestment function

G = g₀-g₁YGovernmentexpenditures

T = t₀+t₁YTaxes

Y^D= Y - TDisposable income

Z = C + I + G + X - IMDemand

X = x₁Y*Export

IM = m₁YImport

a.Present the mathematical calculation of the multiplier.

b.Which elements in the model increase the strength of the multiplier, and which elements decrease the strength of the multiplier? Explain!

c.Some elements in the model can be labeled as 'automatic stabilizers'. i) Explain what an automatic stabilizer is, and ii) which elements can be labeled as such?

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