Detailed Answer

= W W - Given the behavioral equations both for demand side and supply side as follows. 1. Y = c(yd, A/p) + I(-) +G 2. M = L(Y,i) 3. Y = F(K,N) 4. = Fr(K,N) 5. 71-t) = 9(N) Determine the magnitude and direction of a l-unit change in (a) government spending, (b) lump-sum taxation (c) the tax rate and (d) the money supply on the equilibrium level of income. In short, perform the comparative-static exercise of determining the government multiplier, the autonomous tax multiplier, and the tax rate multiplier. 1. =? dy dG = ? 2. 3. dt dy 4. = ? dM Case 1: if r, P and Ware held constant. Case 2: if r is variale but P and Ware held constant. Case 3: if r and P are variable but W is held constant. Case 4: if r, P and W all are variable. ) NB: for explanation use both graph and mathematical approach! = W W - Given the behavioral equations both for demand side and supply side as follows. 1. Y = c(yd, A/p) + I(-) +G 2. M = L(Y,i) 3. Y = F(K,N) 4. = Fr(K,N) 5. 71-t) = 9(N) Determine the magnitude and direction of a l-unit change in (a) government spending, (b) lump-sum taxation (c) the tax rate and (d) the money supply on the equilibrium level of income. In short, perform the comparative-static exercise of determining the government multiplier, the autonomous tax multiplier, and the tax rate multiplier. 1. =? dy dG = ? 2. 3. dt dy 4. = ? dM Case 1: if r, P and Ware held constant. Case 2: if r is variale but P and Ware held constant. Case 3: if r and P are variable but W is held constant. Case 4: if r, P and W all are variable. ) NB: for explanation use both graph and mathematical approach