Question: Given the following model for an economy C = 100 + 0.8Yd G = 800 T = 500 %3D | = 200 a) Calculate the level of savings when the economy is in equilibrium. b) Find government spending multiplier. c) Find the new equilibrium level of output if investment is increased by 100 (AI = 100).

Question: Given the following model for an economy C = 100 + 0.8Yd G = 800 T = 500 %3D | = 200 a) Calculate the level of savings when the economy is in equilibrium. b) Find government spending multiplier. c) Find the new equilibrium level of output if investment is increased by 100 (AI = 100).

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter9: Demand-side Equilibrium: Unemployment Or Inflation?

Section9.A: The Simple Algebra Of Income Determination And The Multiplier

Problem 4TY

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