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 econom (b) Calculate the spending multiplier. (c) Calculate the level of consumption at equilibrium in the economy. (d) Graph this three-sector model. Label everything.

ENGR.ECONOMIC ANALYSIS
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**Economic Analysis Using a Three-Sector Model**

1. **Using the following information:**

   \( C = 200 + 0.9Y_d \)

   \( I = 250 \)

   \( G = 100 \)

   \( T = 100 \)

   \( Y_d = Y - T \), is disposable income.

   **Tasks:**

   (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.

---

**Exploration of Expansionary Fiscal Policy**

- **The Case of an Increase in Government Expenditures (Expansionary Fiscal Policy):**

   (e) Suppose that the government decides to increase government spending but keeps 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 new values). Label everything.

---

2. **Scenario Analysis**

   Congratulations! You’ve just been appointed the chair of the Council of Economic Advisors in Cellphoneland. You must rely on your research assistant for the specifics. The current income (or output) is $50,000, the marginal propensity to consume (mpc) is 0.75, and the president wants to raise...


*Note: Diagrams or graphs that would accompany this text should clearly label axes, intercepts, and any shifts or changes in equilibrium points. These graphs are essential for visualizing changes in income and consumption levels due to fiscal policy adjustments.*
Transcribed Image Text:**Economic Analysis Using a Three-Sector Model** 1. **Using the following information:** \( C = 200 + 0.9Y_d \) \( I = 250 \) \( G = 100 \) \( T = 100 \) \( Y_d = Y - T \), is disposable income. **Tasks:** (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. --- **Exploration of Expansionary Fiscal Policy** - **The Case of an Increase in Government Expenditures (Expansionary Fiscal Policy):** (e) Suppose that the government decides to increase government spending but keeps 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 new values). Label everything. --- 2. **Scenario Analysis** Congratulations! You’ve just been appointed the chair of the Council of Economic Advisors in Cellphoneland. You must rely on your research assistant for the specifics. The current income (or output) is $50,000, the marginal propensity to consume (mpc) is 0.75, and the president wants to raise... *Note: Diagrams or graphs that would accompany this text should clearly label axes, intercepts, and any shifts or changes in equilibrium points. These graphs are essential for visualizing changes in income and consumption levels due to fiscal policy adjustments.*
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