No. 6 Consider the following equations for this particular economy. C = 100+ 0.75Yd I = 150 G = 250 T = 200 X = 100 Q = 0.25Yd a. What is the equilibrium level of income of this economy? Is the trade balance in deficit or surplus? By how much? b. Suppose there is an increase in government expenditures by 50. What is the effect on the equilibrium level of income? What is the effect on the trade balance? Explain your answers. C. This question is independent of Question (b). Suppose exports increase by 50. Compared to you answer in (a), what is the effect on the equilibrium level of income and on the trade balance? Explain your answers.

No. 6 Consider the following equations for this particular economy. C = 100+ 0.75Yd I = 150 G = 250 T = 200 X = 100 Q = 0.25Yd a. What is the equilibrium level of income of this economy? Is the trade balance in deficit or surplus? By how much? b. Suppose there is an increase in government expenditures by 50. What is the effect on the equilibrium level of income? What is the effect on the trade balance? Explain your answers. C. This question is independent of Question (b). Suppose exports increase by 50. Compared to you answer in (a), what is the effect on the equilibrium level of income and on the trade balance? Explain your answers.

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

No. 6
Consider the following equations for this particular economy.
C = 100+ 0.75Yd
I = 150
G = 250
T = 200
X = 100
Q = 0.25Yd
a.
What is the equilibrium level of income of this economy? Is the trade balance in deficit or
surplus? By how much?
b. Suppose there is an increase in government expenditures by 50. What is the effect on the
equilibrium level of income? What is the effect on the trade balance? Explain your answers.
C.
This question is independent of Question (b). Suppose exports increase by 50. Compared to
you answer in (a), what is the effect on the equilibrium level of income and on the trade
balance? Explain your answers.

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