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Macroeconomics 13th Edition by William Baumol ,Alan Blinder
Edition 13ISBN: 978-1305280601Macroeconomics 13th Edition by William Baumol ,Alan Blinder
Edition 13ISBN: 978-1305280601 Exercise 3
(More difficult) 9 Consider an economy in which the consumption function takes the following simple algebraic form:
C = 300 + 0.75 DI
and in which investment ( I ) is always $900 and net exports are always -$100. Government purchases are fixed at $1,300 and axes are fixed at $1,200. Find the equilibrium level of GDP, and then compare your answer to Table₁ and Figure 2. ( Hint: Remember that disposable income is GDP minus taxes: DI = Y - T = Y - 1,200.)
C = 300 + 0.75 DI
and in which investment ( I ) is always $900 and net exports are always -$100. Government purchases are fixed at $1,300 and axes are fixed at $1,200. Find the equilibrium level of GDP, and then compare your answer to Table₁ and Figure 2. ( Hint: Remember that disposable income is GDP minus taxes: DI = Y - T = Y - 1,200.)
Explanation
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An equilibrium level of GDP of an econom...
Macroeconomics 13th Edition by William Baumol ,Alan Blinder
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