Given the following: Y= C + I + G. C= 50 + 0.8Yd I= 160 G=...

Given the following:

Y= C + I + G.

C= 50 + 0.8Y^d

I= 160

G= 150, T = 200

Determine the equilibrium level of output (Y).

Calculate Y^d, C, S.

Calculate the expenditure\ tax multiplier.

Now suppose that the potential GDP equals 1100, By how much would government spending\ tax need to change to close the gap?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

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