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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
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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
Transcribed Image Text: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?
Transcribed Image Text: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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