DGK only please Assume a closed economy with a GDP (Y) of 6,000. Consumption(C) is given by the equation C = 600 + 0.6(Y −T). Investment (I) isgiven by the equation I = 2,000– 100i, where i is the nominal rate ofinterest (in percent). Taxes (T) are 500 and government spending(G) is also 500.(a) What is the autonomous consumption?(b) What is the autonomous spending?(c) What is the marginal propensity to consume?(d) Graph the Aggregate Demand(e) What is the equilibrium value of i?(f) What is the equilibrium value of C?(g) What is the equilibrium value of I?(h) What is the value of private saving?(i) What is the value of public saving?(1) What is the value of national saving?(k) Graph the IS relation

Answered: Assume a closed economy with a GDP (Y)…

ENGR.ECONOMIC ANALYSIS

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ISBN:9780190931919

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Chapter1: Making Economics Decisions

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DGK only please

Assume a closed economy with a GDP (Y) of 6,000. Consumption
(C) is given by the equation C = 600 + 0.6(Y −T). Investment (I) is
given by the equation I = 2,000– 100i, where i is the nominal rate of
interest (in percent). Taxes (T) are 500 and government spending
(G) is also 500.
(a) What is the autonomous consumption?
(b) What is the autonomous spending?
(c) What is the marginal propensity to consume?
(d) Graph the Aggregate Demand
(e) What is the equilibrium value of i?
(f) What is the equilibrium value of C?
(g) What is the equilibrium value of I?
(h) What is the value of private saving?
(i) What is the value of public saving?
(1) What is the value of national saving?
(k) Graph the IS relation

Expert Solution

Step 1: Define AD

Aggregate Demand: Aggregate demand in an economy is the sum of private consumption expenditure (C), private investment expenditure (I), government expenditure and the net exports (exports - imports).

C=600+0.6(Y-T)

I=2000-100i

T=500

G=500

As per asked, pert D, G and K is solved

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