Consider an economy where the natural rate of unemployment rate is 5% and real GDP at full employment is $3.50 billion. Consumers' spending behavior is described by the equation: C = 150 +0.75DI, while firms investment behavior is described by the equation 1 = 300 +0.2Y-750r Trade is allowed and currently imports are defined by the equation IM = 250+ 0.2Y. In 2016, exports is fixed at $300 million and government spending is fixed at $800 million. Furthermore, in the same year, tax rate is 20% and the interest rate is 8%. (Question 6 of 15) Consider that in 2017, the government decides to increase government spending to $1000 million. Assume that all other spending behaviors and rates remain the same.

Consider an economy where the natural rate of unemployment rate is 5% and real GDP at full employment is $3.50 billion. Consumers' spending behavior is described by the equation: C = 150 +0.75DI, while firms investment behavior is described by the equation 1 = 300 +0.2Y-750r Trade is allowed and currently imports are defined by the equation IM = 250+ 0.2Y. In 2016, exports is fixed at $300 million and government spending is fixed at $800 million. Furthermore, in the same year, tax rate is 20% and the interest rate is 8%. (Question 6 of 15) Consider that in 2017, the government decides to increase government spending to $1000 million. Assume that all other spending behaviors and rates remain the same.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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