Consider a simple economy in which investment is constant and equal to $100 billion. There is no
Question:
C = $40 billion + 0.75Y.
a. What is the value of the marginal propensity to consume?
b. What is consumption at an output of $1,000 billion?
c. What is the equilibrium GDP in this model?
d. What is the value of the multiplier?
e. What happens to equilibrium GDP should investment demand fall to $80 billion?
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a 075 b 790 b...View the full answer
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Related Book For 
Principles of Money Banking and Financial Markets
ISBN: 978-0321339195
12th edition
Authors: Lawrence S. Ritter, William L. Silber, Gregory F. Udell
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