Essay
(a) Suppose the consumption function for a closed economy without government is C = 250 + 0.75Y and planned investment is I = 50. What is the equilibrium level of real GDP?
(b) If business increases planned investment expenditure by 50 to 100, what is the new equilibrium real GDP?
(c) What is the slope of the AE function in this economy and the value of the multiplier?
Correct Answer:
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(a) Equilibrium Y = 1200
(b) N...View Answer
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(b) N...
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