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ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption C=100+ 0.8Y. Assume further that planned investment lg, government spending G, and net exports Xn are independent of the level of real GDP and constant at /g=60, G= 0, and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C+ Ig+G+X Instructions: Round your answers to the nearest whole number. a. Calculate the equilibrium level of income or real GDP for this economy. $ b. What happens to equilibrium Y if lg changes to 40? $ What does this outcome reveal about the size of the multiplier? Multiplier =

ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption C=100+ 0.8Y. Assume further that planned investment lg, government spending G, and net exports Xn are independent of the level of real GDP and constant at /g=60, G= 0, and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C+ Ig+G+X Instructions: Round your answers to the nearest whole number. a. Calculate the equilibrium level of income or real GDP for this economy. $ b. What happens to equilibrium Y if lg changes to 40? $ What does this outcome reveal about the size of the multiplier? Multiplier =

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
Problem 5TY
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ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption C=100+ 0.8Y. Assume further that planned investment lg, government spending G, and net exports Xn are independent of the level of real GDP and constant at /g=60, G= 0, and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C+ Ig+G+X Instructions: Round your answers to the nearest whole number. a. Calculate the equilibrium level of income or real GDP for this economy. $ b. What happens to equilibrium Y if lg changes to 40? $ What does this outcome reveal about the size of the multiplier? Multiplier =
Transcribed Image Text:ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption C=100+ 0.8Y. Assume further that planned investment lg, government spending G, and net exports Xn are independent of the level of real GDP and constant at /g=60, G= 0, and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C+ Ig+G+X Instructions: Round your answers to the nearest whole number. a. Calculate the equilibrium level of income or real GDP for this economy. $ b. What happens to equilibrium Y if lg changes to 40? $ What does this outcome reveal about the size of the multiplier? Multiplier =
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