Essay
Assume that the following model of the economy applies:
C = a + b(Y - T)
Ifixed = c + dY
Iinventories = g + hY
Y = C + Ifixed + Iinventories + G
Write an expression for equilibrium Y in this model. If b = 0.5, d = 0.2, and h = 0.2, what are the multipliers for G and T?
Correct Answer:
Verified
The expression is:
Y = (a + c ...View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Correct Answer:
Verified
Y = (a + c ...
View Answer
Unlock this answer now
Get Access to more Verified Answers free of charge
Q44: During recessions, investment spending usually decreases because:<br>A)
Q45: Tobin's q equals the:<br>A) cost of buying
Q46: Use the neoclassical model of business fixed
Q47: Holding other factors constant, the decline in
Q48: If real interest rates increase, what will
Q50: Business fixed investment includes:<br>A) rental housing that
Q51: The theory behind Tobin's q indicates that:<br>A)
Q52: The corporate income tax is a tax
Q53: Inventory investment includes spending on:<br>A) equipment and
Q54: The investment tax credit:<br>A) enables a firm