ADVANCED ANALYSIS Assume that the consumption schedule for a mixed open economy is such that consumption is: C = 250+ 0.8Yd Assume further that planned investment /g and net exports Xn are independent of the level of real GDP and constant at lg = 50 and X = 30. Lastly, assume government spending G= 40 and taxes T = 40. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y=C+Ig+G+Xn
ADVANCED ANALYSIS Assume that the consumption schedule for a mixed open economy is such that consumption is: C = 250+ 0.8Yd Assume further that planned investment /g and net exports Xn are independent of the level of real GDP and constant at lg = 50 and X = 30. Lastly, assume government spending G= 40 and taxes T = 40. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y=C+Ig+G+Xn
Chapter1: Making Economics Decisions
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![**Advanced Analysis**
Assume that the consumption schedule for a mixed open economy is such that consumption is:
\[ C = 250 + 0.8Y_d \]
Assume further that planned investment \( I_g \) and net exports \( X_n \) are independent of the level of real GDP and constant at \( I_g = 50 \) and \( X_n = 30 \). Lastly, assume government spending \( G = 40 \) and taxes \( T = 40 \). Recall also that, in equilibrium, the real output produced (\( Y \)) is equal to aggregate expenditures:
\[ Y = C + I_g + G + X_n \]
Given that taxes \( T \) are present, the equilibrium condition can be rewritten as:
\[ Y = 250 + 0.8(Y - T) + I_g + G + X_n \]
**Instructions:** Enter your answers as whole numbers.
1. **Calculate the equilibrium level of income or real GDP for this economy.**
- **Equilibrium GDP (Y) = $ __________**
2. **What happens to equilibrium GDP if \( X_n \) changes to 40?**
- **Equilibrium GDP (Y) = $ __________**
3. **What does this outcome reveal about the size of the spending multiplier?**
- **Spending multiplier = __________**](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fdbf8765a-c0ab-46fe-8663-61e338d72b7c%2F0eb8b9d8-effa-4476-bfb0-75254f816773%2Fjwwbqam_processed.jpeg&w=3840&q=75)
Transcribed Image Text:**Advanced Analysis**
Assume that the consumption schedule for a mixed open economy is such that consumption is:
\[ C = 250 + 0.8Y_d \]
Assume further that planned investment \( I_g \) and net exports \( X_n \) are independent of the level of real GDP and constant at \( I_g = 50 \) and \( X_n = 30 \). Lastly, assume government spending \( G = 40 \) and taxes \( T = 40 \). Recall also that, in equilibrium, the real output produced (\( Y \)) is equal to aggregate expenditures:
\[ Y = C + I_g + G + X_n \]
Given that taxes \( T \) are present, the equilibrium condition can be rewritten as:
\[ Y = 250 + 0.8(Y - T) + I_g + G + X_n \]
**Instructions:** Enter your answers as whole numbers.
1. **Calculate the equilibrium level of income or real GDP for this economy.**
- **Equilibrium GDP (Y) = $ __________**
2. **What happens to equilibrium GDP if \( X_n \) changes to 40?**
- **Equilibrium GDP (Y) = $ __________**
3. **What does this outcome reveal about the size of the spending multiplier?**
- **Spending multiplier = __________**
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