Suppose you are given the following information. Autonomous spending is at $3000, government spending is at $4000, investment spending is at $2000, net exports are $1000, taxes are set at $3000 and the mpc is .8 or 80%. What is the equilibrium level of output? What would happen if the government tried to balance the budget? The other day, it was announced the consumer confidence was up last month. This sounded good news bells for firms. Why? What would be affected in our equation above? Why would it matter? Suppose the government tried to balance the budget my cutting spending, what would be the equilibrium level of output? If there is “crowding out (or in)”, what else might change in your equation? What impact would that have
Suppose you are given the following information. Autonomous spending is at $3000, government spending is at $4000, investment spending is at $2000, net exports are $1000, taxes are set at $3000 and the mpc is .8 or 80%. What is the equilibrium level of output? What would happen if the government tried to balance the budget? The other day, it was announced the consumer confidence was up last month. This sounded good news bells for firms. Why? What would be affected in our equation above? Why would it matter? Suppose the government tried to balance the budget my cutting spending, what would be the equilibrium level of output? If there is “crowding out (or in)”, what else might change in your equation? What impact would that have
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