Question
Consider the following Open Economywith the following parameters, in billions: Consumption (C)= 300 + .8(Y D ). Personal Disposable Income (Y D ) = Y
Consider the following Open Economywith the following parameters, in billions:
Consumption (C)= 300 + .8(YD). Personal Disposable Income (YD) = Y - T + TR
Government Spending (G)= 400. Transfers (TR)= 100. Taxes (T)= .25Y.
Investment (I)= 400. Exports (X)= 200. Imports (IM)= 300.
In this Economy, Equilibrium Income is _____________ , the Government Budget is _____________ and the Government Spending/Investment Multiplier is ______________.
Select one:
a.
2700 billion, Surplus of 175 billion, 2.5
b.
2500 billion, Surplus of 125 billion, 2.5
c.
2700 billion, balanced budget, 5
d.
5000 billion, Deficit of 125 billion, 5
e.
2500 billion, surplus of 125 billion, 5
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