ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption is: C = 100 + 0.75Y Assume further that planned investment Ig and net exports Xn are independent of the level of real GDP and constant at Ig = 60 and Xn = 10. Recall also that, in equilibrium, the real output produced (Y) is equal to aggregate expenditures: Y = C + Ig + Xn Instructions: Round your answers to the nearest whole number.a. What is the equilibrium level of income or real GDP for this economy? Equilibrium GDP (Y) = $ . b. What happens to equilibrium Y if Ig changes to 40? Equilibrium GDP (Y) = $ . What does this outcome reveal about the size of the spending multiplier? Spending multiplier = .
ADVANCED ANALYSIS Assume that the consumption schedule for a private open economy is such that consumption is:
C = 100 + 0.75Y
Assume further that planned investment Ig and net exports Xn are independent of the level of real
Y = C + Ig + Xn
Instructions: Round your answers to the nearest whole number.
a. What is the equilibrium level of income or real GDP for this economy?
Equilibrium GDP (Y) = $ .
b. What happens to equilibrium Y if Ig changes to 40?
Equilibrium GDP (Y) = $ .
What does this outcome reveal about the size of the spending multiplier?
Spending multiplier = .
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