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I Q I Lab 4 [Question 6) ~ Lyryx Learning Inc B laecon1.lyryx.comfstudent-servletsJLabServlet?ccid=3693 Let the Canadian economy he described below. You are an economist in the Department of Finance, Ottawa. = 50 + 0.7Yd (Yd is disposable income) I = 360 (Investment spending) G = 280 (Government purchases) NT = D.2Y (Net taxes) = 10 (Exports are constant) IM = ELDBY (Imports depend positively on our own Y) a) Calculate the equilibrium Y. Y = 0 b} Find the autonomous multiplier. Autonomous multiplier = D c) Find the government budget balance BB, given your Y in (a). BB = 0 d) Oil prices have been rising recently. Higher crude oil prices translate to higher costs for gasoline, plastic and many products. Suppose the higher oil prices translate to our investment spending dropping from 360 to 160 due to a weaker investment condence. Find the new Y. Y = 0 c) Find the BB as a result of the drop in investment spending. BB = 0 f) Is this change in BB due to an increase in government spending. i.e., is the Canadian govemment to be blamed? 0 Yes O No g} Suppose the govemment wants to push the economy back to the Y level in (a) but with the investment spending still at I = 160. Find the new G necessary. G=U Labia-4" Chrome File Edit View History Bookmarks People Tab Window Help 99% Tue 9:28 AM Q DE .. . Lab 4 (Question 5) ~ Lyryx Learning Inc laecon1.lyryx.com/student-servlets/LabServlet?ccid=3693 f) Is this change in BB due to an increase in government spending, i.e., is the Canadian government to be blamed? O Yes O No g) Suppose the government wants to push the economy back to the Y level in (a) but with the investment spending still at I = 160. Find the new G necessary. G = 0 h) Also find new BB with the government spending in (9) and the investment spending = 160. BB = 0 i) Without further calculations, use the AD-AS diagram to demonstrate the effect of the government's action in (9). Be sure to include the initial drop in investment spending from (d) in your diagram. Original Equilibrium (Point) LADe 135- 120- 105 AS Price level 90 7 75 60- 30 15- 100 800 1200 1600 2000 2400 Reset Real GDP Lab 4 (Question 5) ~ Lyryx Learning Inc JUN 23