Assume that the economy spends 50 billion pesos at zero disposable income. Assume further that the spending from the business amounts to 20 billion pesos. It is also observed that the economy spends 75 percent only of the income it receives. Government spending is equal to 15 billion pesos. INCOME (Y) 320 340 360 380 400 420 440 460 480 500 CONSUMPTION (C) INVESTMENT GOVERNMENT (1) (G) TOTAL SPENDING (C+I+G) Questions: 1. Using the model Y = C + I, calculate the equilibrium level of income for this economy. 2. Using the model Y=C+I+G, calculate the equilibrium level of income for this economy. 3. Compute the size of the multiplier for this economy.

Assume that the economy spends 50 billion pesos at zero disposable income. Assume further that the spending from the business amounts to 20 billion pesos. It is also observed that the economy spends 75 percent only of the income it receives. Government spending is equal to 15 billion pesos. INCOME (Y) 320 340 360 380 400 420 440 460 480 500 CONSUMPTION (C) INVESTMENT GOVERNMENT (1) (G) TOTAL SPENDING (C+I+G) Questions: 1. Using the model Y = C + I, calculate the equilibrium level of income for this economy. 2. Using the model Y=C+I+G, calculate the equilibrium level of income for this economy. 3. Compute the size of the multiplier for this economy.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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