Consider the goods market model where consumption is given by: C = co + C1(Y investment is given by: I = b, + bịY – bzi, and tax is given by T = to + t,Y. G is government spending and is given. Assuming co = 100, cq = 0.6, bo = 150, bị = 0.2, = 0.3, and b, = 1,000. Keeping all other things constant, what will be the change in the %3D %3D %3D t1 equilibrium output (Y*) in the goods market if the interest rate, i, is reduced by 5% (round the nearest decimal point)? Da. All of the answers here are incorrect O b. $327.4 Dc S86.2 Od.$125.0 De. S250.0
Consider the goods market model where consumption is given by: C = co + C1(Y investment is given by: I = b, + bịY – bzi, and tax is given by T = to + t,Y. G is government spending and is given. Assuming co = 100, cq = 0.6, bo = 150, bị = 0.2, = 0.3, and b, = 1,000. Keeping all other things constant, what will be the change in the %3D %3D %3D t1 equilibrium output (Y*) in the goods market if the interest rate, i, is reduced by 5% (round the nearest decimal point)? Da. All of the answers here are incorrect O b. $327.4 Dc S86.2 Od.$125.0 De. S250.0
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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
Transcribed Image Text:Consider the goods market model where consumption is given by: C = co +c, (Y – T),
investment is given by: I = b, + b¡Y – b2i, and tax is given by T = to + t,Y. G is
government spending and is given. Assuming co = 100, c = 0.6, bo = 150, bị = 0.2,
= 0.3, and b, = 1,000. Keeping all other things constant, what will be the change in the
t1
equilibrium output (Y*) in the goods market if the interest rate, i, is reduced by 5% (round to
the nearest decimal point)?
O a. All of the answers here are incorrect
O b. $327.4
Oc. S86.2
O d. $125.0
O e. $250.0
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