Consider the basic Keynesian-cross model (without government or foreign sectors), where the marginal propensity to consume out of each dollar of disposable income is 60 cents. Initially, autonomous consumption is $350 billion, and Planned investment is $150 billion. Then, animal spirits soar and businesses increase Planned investment to $200 billion. What is the change in equilibrium output (to the closest billion)?
Consider the basic Keynesian-cross model (without government or foreign sectors), where the marginal propensity to consume out of each dollar of disposable income is 60 cents. Initially, autonomous consumption is $350 billion, and Planned investment is $150 billion. Then, animal spirits soar and businesses increase Planned investment to $200 billion. What is the change in equilibrium output (to the closest billion)?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider the basic Keynesian-cross model (without government or foreign sectors), where the
marginal propensity to consume out of each dollar of disposable income is 60 cents. Initially,
autonomous consumption is $350 billion, and Planned investment is $150 billion. Then, animal
spirits soar and businesses increase Planned investment to $200 billion. What is the change in
equilibrium output (to the closest billion)?
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