1. Using the following information: C = 200 + 0.9Yd | = 250 G = 100 T= 100 Ya = Y-T, is disposable income. (a) Calculate the equilibrium level of income of this three-sector economy. (b) Calculate the spending multiplier. (c) Calculate the level of consumption at equilibrium in the economy.
1. Using the following information: C = 200 + 0.9Yd | = 250 G = 100 T= 100 Ya = Y-T, is disposable income. (a) Calculate the equilibrium level of income of this three-sector economy. (b) Calculate the spending multiplier. (c) Calculate the level of consumption at equilibrium in the economy.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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How would I do b and c

Transcribed Image Text:**Using the following information:**
- \( C = 200 + 0.9Y_d \)
- \( I = 250 \)
- \( G = 100 \)
- \( T = 100 \)
\( Y_d = Y - T \), is disposable income.
**(a)** Calculate the equilibrium level of income of this three-sector economy.
**(b)** Calculate the spending multiplier.
**(c)** Calculate the level of consumption at equilibrium in the economy.
**(d)** Graph this three-sector model. Label everything.
Now, we will explore the effects of expansionary fiscal policy on this model.
**The case of an increase in Government expenditures (Expansionary fiscal policy)**
**(e)** Suppose that the government decides to increase government spending by 100 (while keeping taxes constant, i.e., \( T = 100 \), and \( G = 200 \)). Calculate the corresponding equilibrium level of income.
**(f)** Calculate the new level of consumption at equilibrium in the economy.
**(g)** Using the graph you obtained in part (d), graph the three-sector model (with \( G = 200 \) and \( T = 100 \)). Label everything.
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