Consider the following closed economy SI model set up Y = 18000 C = 300 + 0.8(Y − 2500) I = 3500 − 400(r) G = 3000 T = 2500 (a) Compute the impact on r and I, if G increases by 500. (b) Compute the impact on r and I, if G increases by 500. (c) Compute the impact on r and I, if both G and T increase by 500.
Consider the following closed economy SI model set up Y = 18000 C = 300 + 0.8(Y − 2500) I = 3500 − 400(r) G = 3000 T = 2500 (a) Compute the impact on r and I, if G increases by 500. (b) Compute the impact on r and I, if G increases by 500. (c) Compute the impact on r and I, if both G and T increase by 500.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
) Consider the following closed economy SI
model set up
Y = 18000
C = 300 + 0.8(Y − 2500)
I = 3500 − 400(r)
G = 3000
T = 2500
(a) Compute the impact on r and I, if G
increases by 500.
(b) Compute the impact on r and I, if G
increases by 500.
(c) Compute the impact on r and I, if both
G and T increase by 500.
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