a) calculate the national income equilibrium. b) based on your answer in (a), draw the aggregate expenditure graph. c) suppose that investment changes by 200, what would happen to the national income equilibrium using the multiplier formula?

a) calculate the national income equilibrium. b) based on your answer in (a), draw the aggregate expenditure graph. c) suppose that investment changes by 200, what would happen to the national income equilibrium using the multiplier formula?

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter11: Managing Aggregate Demand: Fiscal Policy

Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy

Problem 1TY

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Question

autonomous consumption=310

marginal propensity to consume=0.4

T=150

I=250

G=100

a) calculate the national income equilibrium.

b) based on your answer in (a), draw the aggregate expenditure graph.

c) suppose that investment changes by 200, what would happen to the national income equilibrium using the multiplier formula?

Definition Definition Monetary value of all goods and services produced in an economy during a financial year. National income also refers to the total income earned by the factors of production during a financial year.

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