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Consider the following model i) C = 1650 + mpc (Y - tY) ii) I = 800 iii) G = 500 iv) X - M
Consider the following model
i) C = 1650 + mpc (Y - tY)
ii) I = 800
iii) G = 500
iv) X - M = 500 - mpi (Y)
where:
t = the (flat) tax rate
mpc = the marginal propensity to consume
mpi = the marginal propensity to import
suppose mpc = .60, t = .15, mpi = .25
Given the information above, solve for the equilibrium outpu
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