C = 160 + 0.7YD, T= 100, I= 150, G= 150, NX = 100 – 0.1Y. a. What is disposable income (YD)? b. What is equilibrium GDP (Y)? What is consumption spending at the equilibrium (C)? d. What is the value of multiplier? e. If government spending increases by 100 units how much does equilibrium income change? f. If government increases both taxes and government spending by 100 units how much does equilibrium income change? g. If this was a closed economy (NX=0), what would be the value of multiplier? Compare with the value you obtained previously for the open economy, and comment on why they are different.

C = 160 + 0.7YD, T= 100, I= 150, G= 150, NX = 100 – 0.1Y. a. What is disposable income (YD)? b. What is equilibrium GDP (Y)? What is consumption spending at the equilibrium (C)? d. What is the value of multiplier? e. If government spending increases by 100 units how much does equilibrium income change? f. If government increases both taxes and government spending by 100 units how much does equilibrium income change? g. If this was a closed economy (NX=0), what would be the value of multiplier? Compare with the value you obtained previously for the open economy, and comment on why they are different.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

q4.

suppose that economy is charactarized by the following equations

solve (a. b. c. d)

C = 160 + 0.7YD,
I= 150,
G= 150,
T= 100,
NX = 100 – 0.1Y.
a. What is disposable income (YD)?
b. What is equilibrium GDP (Y)?
c. What is consumption spending at the equilibrium (C)?
d. What is the value of multiplier?
e. If government spending increases by 100 units how much does equilibrium
income change?
f. If government increases both taxes and government spending by 100 units how
much does equilibrium income change?
g. If this was a closed economy (NX=0), what would be the value of multiplier?
Compare with the value you obtained previously for the open economy, and
comment on why they are different.

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