Question: The intercept of the consumption function (C0) is given as 1800. You are then told that autonomous investment (I0) is at 1600, and that the

The intercept of the consumption function (C0) is given as 1800. You are then told that autonomous investment (I0) is at 1600, and that the current level of government spending (G0) is at 1700.

Furthermore, you are provided with the information that the current level of exports (X0) is at 1400, while at the same time, the current level of imports (M0) is at 1700. The current taxes (TP) in the economy are at 600.

The slope of the consumption function, the MPC (c1) is at 0.7. In addition, the marginal propensity to invest (i1) is at 0.20, and finally, you are also told that the marginal propensity to import (m1) is at 0.1.

What is the equilibrium level of GDP in economy?

What is the value of the extended expenditure multiplier in this economy?

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Lets find the equilibrium level of GDP and the extended expenditure multiplier for this economy Equilibrium Level of GDP Y We can use the following equation to find the equilibrium level of GDP Y C0 I... View full answer

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