An economy can be described by the following data: C = + MPC (1 t)
Question:
C = + MPC (1 – t) Y
= $1.0 trillion + 0.758(1 - 0.25) Y
I = $2.0 trillion
G = $3.0 trillion
NX = $0.5 trillion
a. Calculate the equilibrium level of real GDP.
b. Suppose that the government increases purchases by $1 trillion. Calculate the change in real GDP.
c. What is the value of the multiplier?
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a Y 1 07581025 Y 2 3 ...View the full answer
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Related Book For 
Macroeconomics
ISBN: 9780132109994
1st Edition
Authors: Glenn Hubbard, Anthony Patrick O'Brien, Matthew P Rafferty
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