If consumption is C=100+0.75Yd
Taxes is T=50+0.5Y
Export is X=200
Import is M=50+0.25Y
Government spending is G=150
Investment is I=200
.Use the multiplier applicable to export,to explain how a100–billion decline in
(i)
GDP/income
Expert Answer
A multiplier is an important factor of an economy that can lead to change in many economic variables when increase or decrease.
An export multiplier is a multiplier that is applicable to export. The effect of a decline in demand by 100 billion on GDP/income will be computed by the export multiplier. Thus,
The export multiplier shows that the GDP/income will be decreased by 1.33 billion with the decline in the 100-billion decline in the demand.
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