Suppose an economy is characterised by the following: C = 160 + 0.6 (400 - T) | = 150 G = 150 T = 100 %3D Determine: i) The equilibrium output level ii) If G rises to 200, what is the new equilibrium level of output? iii) If taxes fall by 50, how much will equilibrium output rise? iv) Based on your calculations in parts ii) above, does higher level of government spending or tax cut have a greater effect on output?

Suppose an economy is characterised by the following: C = 160 + 0.6 (400 - T) | = 150 G = 150 T = 100 %3D Determine: i) The equilibrium output level ii) If G rises to 200, what is the new equilibrium level of output? iii) If taxes fall by 50, how much will equilibrium output rise? iv) Based on your calculations in parts ii) above, does higher level of government spending or tax cut have a greater effect on output?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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