uppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400 + 0.8 I = 310 G = 140 = 400 + 0.8 (Y - T) T = 200, where C is the consumption function, (Y - T) is disposable income, I is investment, G is government spending, and T is taxes If government spending increased by $80, equilibrium Y would Group of answer choices A) increase by $400. B) decrease by $160. C) increase by $80. D) increase by $320. E) increase by approximately $106.67.
uppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model. C = 400 + 0.8 I = 310 G = 140 = 400 + 0.8 (Y - T) T = 200, where C is the consumption function, (Y - T) is disposable income, I is investment, G is government spending, and T is taxes If government spending increased by $80, equilibrium Y would Group of answer choices A) increase by $400. B) decrease by $160. C) increase by $80. D) increase by $320. E) increase by approximately $106.67.
Chapter8: The Keynesian Model
Section: Chapter Questions
Problem 2SQP
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Question
Suppose we have the following information for the simple (fixed r, fixed P, fixed W) Keynesian model.
C = 400 + 0.8 I = 310
G = 140
= 400 + 0.8 (Y - T) T = 200,
where C is the consumption function, (Y - T) is disposable income, I is investment, G is government spending, and T is taxes
If government spending increased by $80, equilibrium Y would
Group of answer choices
A) increase by $400.
B) decrease by $160.
C) increase by $80.
D) increase by $320.
E) increase by approximately $106.67.
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