2. Use the following equations for exercises to answer the following questions. C = $100 + 0.8Y I= $200 G= $250 X= $100 – 0.2Y %3D %3D a. What is the equilibrium level of real GDP? b. What is the new equilibrium level of real GDP if government spending increases by $150? c. What is the new equilibrium level of real GDP if government spending and taxes both increase by $150?

2. Use the following equations for exercises to answer the following questions. C = $100 + 0.8Y I= $200 G= $250 X= $100 – 0.2Y %3D %3D a. What is the equilibrium level of real GDP? b. What is the new equilibrium level of real GDP if government spending increases by $150? c. What is the new equilibrium level of real GDP if government spending and taxes both increase by $150?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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17. Suppose MPC = 0.6, and G increases by $350 and Tax increases by $350 simultaneously. How much would GDP change? (NOTE: Refer to your answers from #14 & #15) 18. Suppose MPC = 0.8, and the government intends to increase GDP by $300. To achieve the goal, tax must (increase decrease ) by $
14
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