Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Assume that four-sector model is at play. C+I+G. All expenditures are autonomous. Given: C = 700 + .80 (1-t)Y TR = 100 t =0.25 L

image text in transcribed
Assume that four-sector model is at play. C+I+G. All expenditures are autonomous. Given: C = 700 + .80 (1-t)Y TR = 100 t =0.25 L =0.20Y40i | =21075i MIP =800 G = 1000 Required: 1. Suppose government expenditures decreases to 880, what happens to equilibrium income and interest rates? Show your proof: computation and graph presentation. 2. Assuming that the fourth sector is included with an autonomous net exports of 250, what happens to equilibrium income and interest rate? 3. Given your simulations above, what realizations do you have with respect to the macroeconomv

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Worldly Philosophers The Lives, Times And Ideas Of The Great Economic Thinkers

Authors: Robert L Heilbroner

7th Edition

068486214X, 9780684862149

More Books

Students also viewed these Economics questions