Assume the information for the economy is the following: C = c0 + c1Yd, where c0...

Assume the information for the economy is the following:

C = c0 + c1Yd, where c0 = 400 and c1 = 0.75

I = 700

G = 500

T = 600

Write out the full Z equation … and include the numbers
Find the multiplier
Find the autonomous parts of Z
Find Y = Z using equilibrium = multiplier x autonomous
Find Y = Z using full Z equation method
Find Saving
Show that (S – I) = (G – T)
If I increases to 900, what is equilibrium Y = Z?
If T falls by 100, how much does equilibrium Y=Z change?

Expert Solution

Rahul Sunny answered 2 years ago

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