Question
Assume that we are in a world of depression economics in which demand shocks only changes output levels rather than price levels.Assume further that the
Assume that we are in a world of "depression economics" in which demand shocks only changes output levels rather than price levels.Assume further that the following equations describe the determinants of aggregate demand.(We also assume here that there is no international trade.)
C = $50 million + .6Y
I = $100 million
G = $200 million
- Explain in words what C, Y, I, and G stand for?
- What is the value of the marginal propensity to consume in this system of equations?
- Find the equilibrium level of income.
- If I drops from $100 to $50 million, what will be the new equilibrium level of income?Please show how you reached your conclusion.
- What is the value of the expenditure multiplier?
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International Marketing And Export Management
Authors: Gerald Albaum , Alexander Josiassen , Edwin Duerr
8th Edition
1292016922, 978-1292016924
