In a closed economy, consumers spend $400 regardless of the level of income, and the marginal propensity to consume (MPC) is 0.80. Investment is equal to $250. The government spends $300 and collects $200 in taxes. The equilibrium level of GDP in this economy is $ (enter your response rounded to the nearest dollar).
In a closed economy, consumers spend $400 regardless of the level of income, and the marginal propensity to consume (MPC) is 0.80. Investment is equal to $250. The government spends $300 and collects $200 in taxes. The equilibrium level of GDP in this economy is $ (enter your response rounded to the nearest dollar).
Chapter11: Managing Aggregate Demand: Fiscal Policy
Section11.B: Algebraic Treatment Of Taxes And Fiscal Policy
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Transcribed Image Text:In a closed economy, consumers spend $400 regardless of the level of income, and the marginal propensity to consume (MPC) is 0.80. Investment is equal to $250. The
government spends $300 and collects $200 in taxes.
The equilibrium level of GDP in this economy is S
(enter your response rounded to the nearest dollar).
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