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. (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 leaving 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.

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. (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 leaving 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.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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