Essay
C = $750 + 0.75(1 - 0.4)Y
I = $600
G = $500
NX = -$50
Use the above data to:
a. Calculate the equilibrium level of GDP.
b. Calculate the value of the expenditure multiplier.
c. Find the change in the initial equilibrium GDP if autonomous investment increases by $75.
d. Find the change in the initial equilibrium GDP if autonomous government purchases decreases by $50.
e. Find the change in the initial equilibrium GDP if autonomous net exports increase by $10.
Correct Answer:
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a. Y= $750 + 0.75(1 - 0.4)Y + $600 + $50...View Answer
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