Suppose the country of Freelandia has an MPC of .85 and a real GDP of $200 billion. If its investment spending decreases by $3 billion, what will be its new level of real GDP?

Q: Y=C+I+G. Y=8,000 G=2,500. T=2,000. C=1,000+2/3(Y-T) 1=1,200-100r a) In this economy, compute private…

A: here we calculate the  private saving, public saving and national saving by using following method…

Q: 1. If imports are $2 trillion, exports are $1.9 trillion, consumption is $3.8 trillion, investment…

A: The objective of the first two questions is to calculate the Gross Domestic Product (GDP) using the…

Q: Consider an economy in which GDP is $30 billion. Tax revenue is $7 billion, consumption is $15…

A: Given information: GDP (Y) is $30 billion Tax revenue (T) is $7 billion Consumption (C) is $15…

Q: The table below shows data for three fictitious countries. a. Compute the current MPC for each…

A: MPC is the Marginal propensity to consume it shows the change in consumption in relation to the…

Q: f the MPC IS 0.9 What should the government do to increase GDP by $4500?

A: The multiplier effect occurs due to an injection in the circular flow of income that increases…