please solve parts c and d 5. Suppose Bard is its own macroeconomy functioning at full employment. Themarginal propensity to consume at Bard is 0.5. Autonomous consumption at Bardis $200. Government spending is $100. Intended investment is $100.a) Calculate the spending multiplier at Bard. Calculate the tax multiplier.Why is the tax multiplier small than the spending multiplier?0001b) Calculate and show graphically equilibrium output and income atBard c) Suppose a crisis in consumer confidence decreases autonomousconsumption to $100. Show graphically and calculate new output andincome.d) What size and type (be specific) of policy would bring the economyback to full-employment output?

Full employment level is achieved where LRAS=AD = SRAS . beyond the level of Full employment output…

c) Suppose a crisis in consumer confidence decreases autonomous consumption to $100. Show graphically and calculate new output and income. d) What size and type (be specific) of policy would bring the economy back to full-employment output?

c) Suppose a crisis in consumer confidence decreases autonomous consumption to $100. Show graphically and calculate new output and income. d) What size and type (be specific) of policy would bring the economy back to full-employment output?

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

please solve parts c and d

5. Suppose Bard is its own macroeconomy functioning at full employment. The
marginal propensity to consume at Bard is 0.5. Autonomous consumption at Bard
is $200. Government spending is $100. Intended investment is $100.
a) Calculate the spending multiplier at Bard. Calculate the tax multiplier.
Why is the tax multiplier small than the spending multiplier?
0001
b) Calculate and show graphically equilibrium output and income at
Bard

c) Suppose a crisis in consumer confidence decreases autonomous
consumption to $100. Show graphically and calculate new output and
income.
d) What size and type (be specific) of policy would bring the economy
back to full-employment output?

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