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9. In the IS model, aggregate consumption is given by C = ā¿Ỹ + x(Y− Ỹ) where x denotes the marginal propensity to consume out of current income. A one dollar increase in government purchases leads to a dollar increase in GDP. a. x/(1-x) 1/(1-x) b. d. e. x/(1+x) 1/(1+x)

9. In the IS model, aggregate consumption is given by C = ā¿Ỹ + x(Y− Ỹ) where x denotes the marginal propensity to consume out of current income. A one dollar increase in government purchases leads to a dollar increase in GDP. a. x/(1-x) 1/(1-x) b. d. e. x/(1+x) 1/(1+x)

MACROECONOMICS
MACROECONOMICS
14th Edition
ISBN:9781337794985
Author:Baumol
Publisher:Baumol
Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?
Section9.A: The Simple Algebra Of Income Determination And The Multiplier
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9. In the IS model, aggregate consumption is given by C = āçỸ + x(Y− Ý) where x denotes the marginal propensity to consume out of current income. A one dollar increase in government purchases leads to a dollar increase in GDP. a. x/(1-x) b. 1/(1-x) C. 1 e. x/(1+x) 1/(1+x)
Transcribed Image Text:9. In the IS model, aggregate consumption is given by C = āçỸ + x(Y− Ý) where x denotes the marginal propensity to consume out of current income. A one dollar increase in government purchases leads to a dollar increase in GDP. a. x/(1-x) b. 1/(1-x) C. 1 e. x/(1+x) 1/(1+x)
20. Consider the IS model studied in class. Suppose ā = 0 and R = ñ. Then, short-run output, Ỹ, is equal to: 0 d. ā + 1 a. b. C. 1 18 e. 1-x ā + br 1- x
Transcribed Image Text:20. Consider the IS model studied in class. Suppose ā = 0 and R = ñ. Then, short-run output, Ỹ, is equal to: 0 d. ā + 1 a. b. C. 1 18 e. 1-x ā + br 1- x
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