In a closed economy, consumers spend $100 regardless of the level of income, and the marginal propensity to consume (MPC) is Investment is equal to $250. The government spends $500 and collects $50 in taxes.

In a closed economy, consumers spend $100 regardless of the level of income, and the marginal propensity to consume (MPC) is Investment is equal to $250. The government spends $500 and collects $50 in taxes.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

In a closed economy, consumers spend $100 regardless of the level of income, and the marginal propensity to consume (MPC) is 0.75.
Investment is equal to $250. The government spends $500 and collects $50 in taxes.
The equilibrium level of GDP in this economy is $
(enter your response rounded to the nearest dollar).

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