Consider the following model of an economy operating with fixed wages, prices and interest rates and hasexcess capacity. Adsume all figures are I Zambian kwacha. C=100+0.8yd, T=100+25Y, G=980 and I= 500 Where c is consumption, yd is disposable income, T is taxes net of transformers, G is government spending on goods and services and I is investments. A. Calculate the equilibrium level of national income B. Illustrate your equilibrium in the keyneasian cross diagran C. What is the value of the multiplier D. Is governnent running a surplus or a deficit E. Show the impact of a reduction in government spending by 80 on the equilibrium level of national income F. Illustrate your new equilibrium in the same Keynesian cross diagram as in b.
Consider the following model of an economy operating with fixed wages, prices and interest rates and hasexcess capacity. Adsume all figures are I Zambian kwacha.
C=100+0.8yd, T=100+25Y, G=980 and I= 500
Where c is consumption, yd is disposable income, T is taxes net of transformers, G is government spending on goods and services and I is investments.
A. Calculate the equilibrium level of
B. Illustrate your equilibrium in the keyneasian cross diagran
C. What is the value of the multiplier
D. Is governnent running a surplus or a deficit
E. Show the impact of a reduction in government spending by 80 on the equilibrium level of national income
F. Illustrate your new equilibrium in the same Keynesian cross diagram as in b.
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